Page 6 of 9 – SEC Filing
Item
4. Purpose of Transaction
The Reporting Persons acquired the securities
described in this Schedule 13D for investment purposes and they intend to review their investments in the Issuer on a continuing
basis. Any actions the Reporting Persons might undertake will be dependent upon the Reporting Persons’ review of numerous
factors, including, but not limited to: an ongoing evaluation of the Issuer’s business, financial condition, operations and
prospects; price levels of the Issuer’s securities; general market, industry and economic conditions; the relative attractiveness
of alternative business and investment opportunities; and other future developments.
The Reporting Persons may, at any time
and from time to time, acquire additional securities of the Issuer, or retain or sell all or a portion of the securities then held,
in the open market or in privately negotiated transactions. In addition, the Reporting Persons, including Mr. Kolchinsky in his
positions as a director of the Issuer, may engage in discussions with management, the board of directors, and shareholders of the
Issuer and other relevant parties or encourage such persons to consider or explore extraordinary corporate transactions, such as:
a merger; sales or acquisitions of assets or businesses; changes to the capitalization or dividend policy of the Issuer; or other
material changes to the Issuer’s business or corporate structure.
Other than as described above, none of
the Reporting Persons currently has any plans or proposals that relate to, or would result in, any of the matters listed in Items
4(a)–(j) of Schedule 13D, although, depending on the factors discussed herein, the Reporting Persons may change their purpose
or formulate different plans or proposals with respect thereto at any time.
Item
5. Interest in Securities of the Issuer
(a) and (b) See Items 7-11 of the cover
pages and Item 2 above.
(c) The following describes the Reporting
Persons’ transactions that were effected during the sixty day period prior to the filing of this Schedule 13D:
On April 11, 2017, the
Reporting Persons acquired 76,500 shares of Redeemable Convertible Preferred Stock of the Company, par value $0.0001 per share
(the “Preferred Stock”), at a price of $100 per share. Of the 76,500 shares of Preferred Stock, 62,424 shares are held
by the Fund and 14,076 shares are held by the Account. Each share of Preferred Stock is convertible into a number of shares of
Common Stock, equal to the accrued value of the Preferred Stock, divided by the conversion price, with cash payment in lieu
of fractional shares. The accrued value per share of Preferred Stock is initially $100 per share, and will be increased daily by
a paid-in-kind dividend at a rate of 12% per annum (which rate may be reduced upon the occurrence of specified corporate events),
subject to customary anti-dilution adjustments. The conversion price is initially $3.19, subject to customary anti-dilution adjustments.
The Preferred Stock is
convertible at any time at the option of the Holder. In addition, following the occurrence of specified corporate events or after
April 11, 2019, the Company may force conversions of the Preferred Stock at any time at which the price per share of the Common
Stock exceeds two-times the conversion price for 45 of the preceding 60 scheduled trading days. However, pursuant to a 19.99% blocker
(the “19.99% Blocker”), no conversion of the Preferred Stock may be effected to the extent that following such conversion,
the holder would beneficially own in excess of 19.99% of the capital stock representing 19.99% of the voting power of the Company.
The 19.99% Blocker will be effective until (x) the Company obtains the approval of its stockholders as required by the applicable
rules of the NASDAQ Global Select Market or (y) the Company is not subject to rules of the NASDAQ Global Select Market. In addition,
each holder of the Preferred Stock may elect to be subject to a 9.99% (or such other percentage up to 19.99% as such holder may
elect or amend upon 61 days’ prior notice) blocker (the “9.99% Blocker”), which election shall only be revocable
upon 61 days’ prior notice. If the 9.99% Blocker is effective, no conversion of the Preferred Stock of the Reporting Persons
could be effected to the extent to which, after such conversion, the Reporting Persons would beneficially own more than 9.99% of
the shares of the Common Stock. Holders of the Preferred Stock are entitled to vote a number of votes equal to the number of shares
of the Common Stock into which such holder’s Preferred Stock is convertible, taking into account the 19.99% Blocker and,
if applicable, the 9.99% Blocker.
