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Stockholders' Equity | 12 Months Ended
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Dec. 31, 2023
Equity [Abstract] |
Stockholders' Equity | Note 10. Stockholders’ Equity (As Restated) Preferred Stock The Company has 5,000,000 authorized shares of preferred stock with a par value of $0.001 per share: • Series X 1 non-voting convertible preferred stock, 515,000 shares designated; 110,086 shares and 117,970 shares issued and outstand ing at December 31, 2023 and 2022, respectively; and • Series X non-voting convertible preferred stock, 10,000 shares designated; 4,422 shares and 6,204 shares issued and outstanding at December 31, 2023 and 2022, respectively. Each share of the Series X 1 or X non-voting convertible preferred stock (the “Preferred Stock”) is convertible into 55.5556 shares of common stock, at the option of the holder at any time, subject to certain limitations, including, that the holder will be prohibited from converting the Preferred Stock into common stock if, as a result of such conversion, the holder, together with its affiliates, would beneficially own a number of shares of common stock above a conversion blocker, which is initially set at 9.99% or 9.9% of the total common stock then issued and outstanding immediately following the conversion of such shares of Series X Preferred Stock or Series X 1 Preferred Stock, respectively. The holder of the Preferred Stock is entitled to receive dividends on shares of the Preferred Stock equal (on an as-if-converted-to-common-stock basis and without regard to any beneficial ownership limitations) to and in the same form as dividends actually paid on shares of the common stock. No other dividends will be paid on shares of the Preferred Stock. In the event of any liquidation, dissolution or winding up, the holder of the Preferred Stock will be entitled to receive out of the assets, whether capital or surplus, the same amount that a holder of common stock would receive if the Preferred Stock were fully converted to common stock, which amounts shall be paid pari passu with all holders of common stock. Shares of the Preferred Stock will generally have no voting rights, except as required by law and except that the consent of a majority of the holders of either series of outstanding Preferred Stock will be required to amend the terms of the such series. 2021 Equity Distribution Agreement On March 31, 2021, the Company filed a registration statement on Form S-3 containing a prospectus and prospectus supplement (the “Prospectus”) under which the Company may offer and sell up to $75.0 million in shares of its common stock, from time to time, pursuant to an open market sale agreement with Jefferies LLC and by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933 (the “ATM Program”). Pursuant to the “baby shelf rules” promulgated by the SEC, if the Company’s public float is less than $75.0 million as of specified measurement periods, the number of shares of common stock that may be offered and sold by the Company under a Form S-3 registration statement, including pursuant to the ATM Program, in any twelve-month period is limited to an aggregate amount that does not exceed one-third of the Company’s public float. As of December 31, 2023, due to the SEC’s “baby shelf rules,” the Company was permitted to sell up to $12.3 million of shares of common stock pursuant to the ATM Program. The Company will remain subject to the “baby shelf rules” under the Form S-3 registration statement until such time as its public float exceeds $75.0 million. During the years ended December 31, 2023 and 2022, no shares were sold under the Prospectus. This Form S-3 registration statement pursuant to which the ATM Program is registered will expire in May 2024, and no shares of common stock may be sold under the ATM Program after that date. 2021 Warrant Exchange Agreement On September 21, 2021, the Company issued warrants exercisable for 298,692 shares of common stock in exchange for warrants exercisable for 5,376.456 shares of Series X 1 Non-Voting Convertible Preferred Stock previously issued as part of the Anelixis merger. These Series X 1 Non-Voting Convertible Preferred Stock warrants were replaced by Eledon for the outstanding warrants issued by Anelixis that were not settled upon completion of the merger. 2022 Exchange Agreement On January 11, 2022, the Company entered into an exchange agreement (the “Series X 1 Exchange Agreement”) with Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS, L.P., MSI BVF SPV, L.L.C. (collectively, the “BVF Exchanging Stockholders”), pursuant to which the Series X 1 Exchanging Stockholders exchanged (the “Series X 1 Exchange”) 550,000 shares of the Company’s common stock for 9,899.99 shares of Series X 1 Non-Voting Convertible Preferred Stock. 2023 Securities Purchase Agreement (As Restated) On April 28, 2023, the Company entered into the Securities Purchase Agreement with Purchasers, pursuant to which the Company agreed to issue and sell to the Purchasers in the Private Placement (i) in an initial closing, (a) an aggregate of 15,151,518 shares (the “Shares”) of the Company’s common stock, $0.001 par value per share, or pre-funded warrants in lieu thereof (the “Pre-Funded Warrants”), and (b) common stock warrants exercisable into an aggregate of 15,151,518 shares of common stock (or Pre-Funded Warrants in lieu thereof) (the “Common Warrants” and, together with the Pre-Funded Warrants, the “Warrants”); (ii) in a second closing, upon the satisfaction of specified conditions set forth in the Securities Purchase Agreement, an aggregate of 20,202,024 shares of common stock (or Pre-Funded Warrants); and (iii) in a third closing, upon the satisfaction of specified conditions set forth in the Securities Purchase Agreement, an aggregate of 25,252,530 shares of common stock (or Pre-Funded Warrants), in each case subject to customary adjustments as provided in the Securities Purchase Agreement, Pre-Funded Warrant or Common Warrant, as applicable. Each Common Warrant has an exercise price of $3.00 per share and expires five years after issuance. The Pre-Funded Warrants are exercisable immediately and until exercised in full, with an exercise price of $0.001 per share. The Shares, the Warrants, and the shares of common stock issuable upon the exercise of the Warrants, have not been registered under the Securities Act of 1933, as amended, and were offered pursuant to the exemption from registration provided in Section 4(a)(2) under the Securities Act of 1933, as amended, and Rule 506(b) promulgated thereunder. On May 5, 2023, the initial closing occurred and the Company received $35.0 million, or net proceeds of approximately $33.0 million after deducting offering costs, in exchange for 8,730,168 shares of common stock and Pre-Funded Warrants to purchase 6,421,350 shares of common stock. The Company may receive an additional $105.0 million upon sale of the shares to be issued in the second and third closings, subject to achieving specified clinical development milestones and volume weighted average share price levels and trading volume conditions, and an additional $45.5 million assuming the exercise of all Common Warrants issued in the initial closing of the Private Placement. In connection with the Private Placement, the Company filed on May 18, 2023, a registration statement on Form S-3 (“Registration Statement”) with the SEC to register for resale the Shares and the shares of common stock issuable upon the exercise of the Warrants. The Registration Statement became effective on June 2, 2023. In August 2024, the Company concluded that the Common Warrants, and the potential issuance of Pre-Funded Warrants in lieu of additional shares of common stock in the second and third closings of the Private Placement as specified in the Securities Purchase Agreement (the “Subsequent Closing Warrants”) do not meet the conditions to be classified as equity instruments under ASC 815-40 and must instead be recorded as liabilities on the Company’s consolidated balance sheets at their fair value and remeasured at fair value for each subsequent reporting period, with corresponding entries to change in fair value of warrant liabilities and fair value of financial instruments issued in excess of proceeds on the Company’s consolidated statement of operations and comprehensive loss. The valuation of the Common Warrants and the Subsequent Closing Warrants is adjusted to fair value (Level 3) at each balance sheet date until the Common Warrants and the Subsequent Closing Warrants are settled or expired. The following table presents the assumptions used in the Black-Scholes option pricing model to determine the fair value of Common Warrants and Subsequent Closing Warrants granted as of December 31, 2023 and as of the issuance date:
|  | December 31, 2023 |  |  | April 28, 2023 (Date of Issuance) |
Risk-free interest rate |  | 3.84% - 3.88% |  |  | 3.50% |
Expected volatility |  | 89.08% - 94.28% |  |  | 88.29% - 91.56% |
Expected term (in years) |  | 4.5 - 6.0 |  |  | 5.0 - 6.5 |
Share price |  | $ | 1.80 |  |  | $ | 2.31 |
2023 Conversion Agreement of Non-Voting Convertible Preferred Stock On May 16, 2023, Cormorant Global Healthcare Master Fund LP provided notice to convert (i) 1,782 shares of Series X Non-Voting Convertible Preferred Stock for 99,000 shares of common stock in accordance with the Certificate of Designation of Preferences, Rights and Limitations of the Series X Non-Voting Convertible Preferred Stock, and (ii) 7,883.586 shares of Series X 1 Non-Voting Convertible Preferred Stock for 437,977 shares of common stock in accordance with the Certificate of Designation of Preferences, Rights and Limitations of the Series X 1 Non-Voting Convertible Preferred Stock. The conversion was completed on May 23, 2023. 2023 Exercise of Pre-Funded Warrants On July 10, 2023, Armistice Capital Master Fund Ltd. (the “Exercising Stockholder”), exercised Pre-Funded Warrants to purchase 501,197 shares of common stock at an exercise price of $0.001 per share, which were issued in conjunction with the Securities Purchase Agreement. On July 14, 2023, the Company issued 501,197 shares of common stock to the Exercising Stockholder in accordance with such exercise. On November 2, 2023, Armistice Capital Master Fund Ltd. (the “Exercising Stockholder”), exercised Pre-Funded Warrants to purchase 653,000 shares of common stock at an exercise price of $0.001 per share, which were issued in conjunction with the Securities Purchase Agreement. On November 6, 2023, the Company issued 653,000 shares of common stock to the Exercising Stockholder in accordance with such exercise. Common Stock Warrants As of December 31, 2023, 21,564,302 warrants were exercisable into common stock (after rounding for fractional shares and subject to beneficial ownership conversion blockers). The following table shows the warrants to purchase common stock activity:
|  | Roll-Forward of Warrant Activity |
|  | Common Stock Warrants |  |  | Pre-funded warrants |  |  | All Other Warrants |  |  | Total |
Balance as of December 31, 2022 |  |  | — |  |  |  | 509,117 |  |  |  | 636,514 |  |  |  | 1,145,631 |
Issued |  |  | 15,151,518 |  |  |  | 6,421,350 |  |  |  | — |  |  |  | 21,572,868 |
Exercised |  |  | — |  |  |  | (1,154,197 | ) |  |  | — |  |  |  | (1,154,197 | )
Cancelled/Expired |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Balance as of December 31, 2023 |  |  | 15,151,518 |  |  |  | 5,776,270 |  |  |  | 636,514 |  |  |  | 21,564,302 |
Preferred Stock Warrants As of December 31, 2023, there were 50,207.419 warrants exercisable into Series X 1 Preferred Stock which are convertible into 2,789,301 shares of common stock (after rounding for fractional shares and subject to beneficial ownership conversion blockers).
|  | Roll-Forward of Series X 1 Convertible Preferred Warrant Activity |
|  | Total |
Balance as of December 31, 2022 |  |  | 50,207.419 |
Assumed and replaced |  |  | — |
Exercised |  |  | — |
Cancelled/Expired |  |  | — |
Balance as of December 31, 2023 |  |  | 50,207.419 |

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