Item
1.01 Entry into a Material Definitive Agreement.
Private
Placement
On
November 17, 2022, InMed Pharmaceuticals Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase
Agreement”) with two institutional accredited investors (the “Purchasers”), for the sale and issuance of an aggregate
of 1,818,185 of its common shares (or pre-funded warrants in lieu thereof) at a purchase price of $3.30 per share (or pre-funded warrant
in lieu thereof). In addition, the Company agreed to issue to the Purchasers, unregistered preferred investment options to purchase up
to an aggregate of 3,272,733 common shares. The foregoing transaction is referred to herein as the “Private Placement.”
The
terms of the Purchase Agreement provided Purchasers whose purchase of common shares in the Private Placement would result in such Purchaser’s
beneficial ownership exceeding 4.99% (or, at the election of the Purchaser, 9.99%) of the Company’s outstanding common shares,
the option of purchasing pre-funded warrants in lieu of common shares in such manner as to result in the same aggregate purchase price
being paid by such Purchaser to the Company.
On
November 21, 2022, the parties consummated the Private Placement. At the closing of the Private Placement, the Company issued to the
Purchasers (i) 150,000 common shares, (ii) pre-funded warrants to purchase an aggregate of 1,668,185 common shares and (iii) preferred
investment options to purchase up to an aggregate of 3,272,733 common shares. In addition, the Purchasers agreed to cancel preferred
investment options to purchase up to an aggregate of 1,383,490 common shares of the Company which had been previously issued to such
Purchaser.
The
pre-funded warrants have an exercise price of $0.0001 per pre-funded warrant and can be exercised at any time from the date and time
of issuance until the pre-funded warrants are exercised in full. The terms of the pre-funded warrants preclude a holder thereof from
exercising such holder’s pre-funded warrants, and the Company from giving effect to such exercise, if after giving effect to the
issuance of common shares upon such exercise, the holder (together with the holder’s affiliates and any other persons acting as
a group together with the holder or any of the holder’s affiliates) would beneficially own in excess of (i) with respect to one
Purchaser, 9.99% of the number of common shares outstanding immediately after giving effect to the issuance of common shares upon such
exercise, and (ii) with respect to the other Purchaser, 4.99% (or, upon election by a holder prior to the issuance of any preferred investment
options or pre-funded warrants, 9.99%) of the number of common shares outstanding immediately after giving effect to the issuance of
common shares upon such exercise.
The
preferred investment options issued to the Purchasers have an exercise price of $3.044 per share, became exercisable immediately upon
issuance and will expire seven years from the date of issuance. The terms of the preferred investment options issued to the Purchasers
preclude a holder thereof from exercising such holder’s preferred investment option, and the Company from giving effect to such
exercise, if after giving effect to the issuance of common shares upon such exercise, the holder (together with the holder’s affiliates
and any other persons acting as a group together with the holder or any of the holder’s affiliates) would beneficially own in excess
of 4.99% (or, upon election by a holder prior to the issuance of any preferred investment options, 9.99%) of the number of common shares
outstanding immediately after giving effect to the issuance of common shares issuable upon exercise of the preferred investment option.
A
holder may increase or decrease the beneficial ownership thresholds specified above, except that the beneficial ownership limitation
may not exceed 9.99% in any event.
In
connection with the Private Placement, the Company entered into a Registration Rights Agreement with the Purchasers, dated November 17,
2022 (the “Registration Rights Agreement”). The Registration Rights Agreement grants the Purchasers certain registration
rights and obligates the Company to file one or more registration statements with the Securities and Exchange Commission (the “SEC”)
by certain dates, covering the resale of the common shares sold in the Private Placement and the common shares issuable upon exercise
of the pre-funded warrants and preferred investment options.
The
aggregate gross proceeds to the Company from the Private Placement were approximately $6.0 million, before deducting placement agent
fees and other offering expenses. H.C. Wainwright & Co., LLC (“Wainwright”) acted as the exclusive placement agent for
the Private Placement.
The
common shares, pre-funded warrants and preferred investment options described above were offered in a private placement under Section
4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Regulation D promulgated thereunder and, along
with the common shares underlying the pre-funded warrants and preferred investment options, have not been registered under the Securities
Act or applicable state securities laws. Accordingly, the common shares, pre-funded warrants, preferred investment options and the common
shares underlying the pre-funded warrants and preferred investment options may not be offered or sold in the United States absent registration
with the SEC or an applicable exemption from such registration requirements. The securities were offered only to accredited investors.
The
foregoing descriptions of the Purchase Agreement, the Registration Rights Agreement, the pre-funded warrants and the preferred investment
options are not complete and are qualified in their entirety by the full text of such documents, copies of which are filed as exhibits
to this report and incorporated herein by reference.
Engagement
Letter
The
Company entered into an engagement letter with Wainwright, dated September 9, 2022 (the “Engagement Letter”), pursuant to
which Wainwright agreed to serve as the Company’s exclusive placement agent, advisor or underwriter in certain offerings, including
the Private Placement. The Company has agreed to pay Wainwright a cash fee, or as to an underwritten offering an underwriter discount,
equal to 7.5% of the aggregate gross proceeds raised in each offering. Upon any exercise for cash of any warrants or options issued to
investors in each offering, the Company has agreed to pay Wainwright a cash fee of 7.5% of the aggregate gross exercise price paid in
cash with respect such exercise. In addition, pursuant to the Engagement Letter, the Company has also agreed to grant to Wainwright,
or its designees, at each closing, warrants to purchase that number of common shares of the Company equal to 6.5% of the aggregate number
of common shares of (or common shares equivalent, if applicable) placed in each offering. Upon any exercise for cash of any warrants
or options issued to investors in each offering, the Company has agreed to issue to Wainwright (or its designees), warrants to purchase
that number of common shares of the Company equal to 6.5% of the aggregate number of such common shares underlying the warrants that
have been so exercised. Warrants issued to Wainwright will have a term of five years and an exercise price equal to 125% of the offering
price per share (or unit, if applicable) in the applicable offering and if such offering price is not available, the market price of
the Company’s common shares on the date an offering is commenced (such price, the “Offering Price”). If warrants are
issued to investors in an offering, the warrants issued to Wainwright are required to have the same terms as the warrants issued to the
investors in the applicable offering, except that the warrants issued to Wainwright shall have an exercise price equal to 125% of the
Offering Price.
The
Company also agreed to pay Wainwright a management fee equal to 1.0% of the gross proceeds raised in the offering, $20,000 for non-accountable
expenses, and up to $35,000 for fees and expenses of legal counsel and other out-of-pocket expenses. The Engagement Letter has indemnity
and other customary provisions.
In
accordance with the Engagement Letter, in connection with the Private Placement, the Company issued to Wainwright, preferred investment
options to purchase an aggregate of 118,182 common shares of the Company. The preferred investment options issued to Wainwright have
an exercise price of $4.125 per share, became exercisable immediately upon issuance and will expire seven years from the date of issuance.
Similar to the preferred investment options issued to the Purchasers, a holder of the preferred investment options issued to Wainwright
is precluded from exercising such holder’s preferred investment option, and the Company is precluded from giving effect to such
exercise, if after giving effect to the issuance of common shares upon such exercise, the holder (together with the holder’s affiliates
and any other persons acting as a group together with the holder or any of the holder’s affiliates) would beneficially own in excess
of 4.99% (or, upon election by a holder prior to the issuance of any preferred investment options, 9.99%) of the number of common shares
outstanding immediately after giving effect to the issuance of common shares issuable upon exercise of the preferred investment option.
The
preferred investment options issued to Wainwright, and the common shares issuable upon exercise thereof, were issued in reliance on the
exemption from registration provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and in
reliance on similar exemptions under applicable state laws.
The
foregoing description of the preferred investment option issued to Wainwright is not complete and is qualified in their entirety by the
full text of such document, the form of which is filed as an exhibit to this report and incorporated herein by reference.