ElectroCore (NSDQ:ECOR) announced today that it entered into a purchase agreement in which the neuroscience company has the right to sell shares of its common stock worth up to $25 million to Lincoln Park Capital Fund.
Basking Ridge, N.J.-based ElectroCore would control the timing and amount of any sales of its common stock, valued at $0.001 per share, to Lincoln Park, according to an SEC Form 8-K.
The agreement is set to last over a 36-month term, during which ElectroCore can direct Lincoln Park to purchase up to 200,000 shares of its common stock as a regular purchase share limit. That limit will increase to 250,000 shares if the closing price of the stock on the applicable date is not below $1 per share and will increase to 300,000 if prices are not below $1.50 per share.
Lincoln Park’s maximum obligation under any regular purchase will not exceed $1 million, according to the filing, unless the companies agree to increase the amount.
If ElectroCore directs Lincoln Park to purchase the maximum number of shares in a regular purchase, it can also direct the company to make an “accelerated purchase” and an “additional accelerated purchase,” each of which includes an additional number of shares that may not exceed 300% of the number of shares bought in the regular purchase and 30% of the total number of shares traded during a specific period.
In that case, the purchase price for those shares will be the lesser of 97% of the volume-weighted average price of the common stock over a certain portion of the date of sale. Under certain circumstances, ElectroCore can direct Lincoln Park to execute multiple accelerated purchases on the same trading day.
The net proceeds collected by ElectroCore will depend on the frequency of sales and prices at which shares are sold, but the company plans to use funds for general corporate purposes and working capital.
ElectroCore has experienced some financial difficulties of late. In May 2019, the company announced a plan to cut nearly 40% from its workforce and “resource adjustments” to turn its focus toward “currently available and near-term revenue opportunities and on clinical programs specifically designed to expand the GammaCore product labeling.”
GammaCore is already indicated for treating episodic cluster and migraine headaches and as an adjunct in preventing cluster headache. The system is a vagus nerve stimulation platform designed to help block the pain signals that cause migraines and cluster attacks.
However, ElectroCore hit another financial stumbling block in September of last year when its shares plummeted more than 10% at one point after the FDA asked for more data on a bid for an expanded indication for GammaCore.
At that point, ECOR shares were trading at better than $3 per share, despite the dips. Today, shares are down -4% at 45¢ per share in mid-afternoon trading.