InMed Pharmaceuticals Inc S-1, filed Dec 7, 2022
InMed Pharmaceuticals Inc. (MTRI)
As filed with the Securities and Exchange Commission on December 7, 2022
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INMED PHARMACEUTICALS INC.
(Exact name of registrant as specified in its charter)
| British Columbia | 2834 | 98-1428279 | ||
| (State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
Suite 310 - 815 West Hastings Street
Vancouver, British Columbia, Canada
V6C 1B4
(604) 669-7207
(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices)
Registered Agent Solutions, Inc.
1100 H Street NW, Suite 840
Washington, D.C. 20005
(888) 705-7274
(Name, address, including zip code, and telephone number, including area code, of agent for service)
with copies to:
|
Sarah Li InMed Pharmaceuticals Inc. Suite 310 – 815 West Hastings Street Vancouver, British Columbia V6C 1B4 Canada (604) 669-7207 |
Brian Fenske Norton Rose Fulbright US LLP 1301 McKinney, Suite 5100 Houston, Texas 77010-3095 United States (713) 651-5557 |
Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer: | ☐ | Accelerated filer: | ☐ |
| Non-accelerated filer: | ☒ | Smaller reporting company: | ☒ |
| Emerging Growth Company: | ☒ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act ☐
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 7, 2022
PRELIMINARY PROSPECTUS
5,090,918 Common Shares
InMed Pharmaceuticals Inc.
This prospectus relates to the offer and resale by the selling shareholders identified herein, or the Selling Shareholders, or any of their pledgees, donees, assignees and successors-in-interest, or collectively, the permitted transferees, of up to 5,090,918 of our common shares, no par value per share, or the common shares, consisting of (i) 150,000 common shares issued to the Selling Shareholders in a private placement consummated in November 2022, or the November Private Placement, (ii) 1,668,185 common shares issuable upon exercise of pre-funded warrants issued to the Selling Shareholders in the November Private Placement and (iii) 3,272,733 common shares issuable upon the exercise of preferred investment options issued to the Selling Shareholders in the November Private Placement. See “Prospectus Summary—Recent Developments—November Private Placement” for additional information.
We will not receive any proceeds from the sale of common shares by the Selling Shareholders. However, upon (i) the cash exercise of the pre-funded warrants, we will receive the exercise price of such warrants, for an aggregate of approximately $166.82 and (ii) the cash exercise of the preferred investment options, we will receive the exercise price of such options, for an aggregate of approximately $10.0 million. We will bear all fees and expenses incident to our obligation to register the common shares covered by this prospectus. Brokerage fees, underwriting discounts and commissions, and similar expenses, if any, attributable to the sale of common shares offered hereby will be borne by the applicable Selling Shareholder.
The Selling Shareholders and any of their permitted transferees may offer and sell the common shares covered by this prospectus in a number of different ways and at varying prices. See “Plan of Distribution” beginning on page 16 for additional information.
Our common shares are listed on the Nasdaq Capital Market under the symbol “INM”. On December 6, 2022, the last reported sale price of our common shares on the Nasdaq Capital Market was $2.43 per share.
We are an “emerging growth company” and a “smaller reporting company” under the federal securities laws and are subject to reduced public company reporting requirements. See “Prospectus Summary—Implications of Being an Emerging Growth Company and a Smaller Reporting Company.”
Investing in our common shares involves a high degree of risk. Before you invest in our common shares, you should carefully read the section entitled “Risk Factors” on page 6 of this prospectus, and other risk factors contained in any applicable prospectus supplement and in the documents incorporated by reference herein and therein.
We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should carefully read this entire prospectus, any amendments or supplements, and the documents incorporated or deemed incorporated by reference herein and therein, before you make your investment decision.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Prospectus dated , 2022
TABLE OF CONTENTS
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ABOUT THIS PROSPECTUS AND EXCHANGE RATES
You should rely only on the information contained in, or incorporated by reference into, this prospectus, and any applicable prospectus supplement or free writing prospectus that we have authorized for use in connection with this offering. Neither we nor the Selling Shareholders have authorized anyone to provide you with additional information or information that is different. This prospectus is an offer to sell only the securities offered hereby and only under circumstances and in jurisdictions where it is lawful to do so. The information appearing in this prospectus is accurate only as of the date of this prospectus and any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or of any sale of the common shares offered hereby. Our business, financial condition, results of operations and prospects may have changed since those dates.
We obtained the industry, market and competitive position data in this prospectus and the documents incorporated by reference herein from our own internal estimates and research as well as from industry and general publications and research surveys and studies conducted by third parties. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the heading “Risk Factors” in this prospectus and under similar headings in the documents incorporated by reference into this prospectus, that could cause results to differ materially from those expressed or implied in these publications and reports.
For investors outside the United States: Neither we nor the Selling Shareholders have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons who come into possession of this prospectus in a jurisdiction outside the United States must inform themselves about, and observe any restrictions relating to, this offering and the distribution of this prospectus.
This prospectus contains references to our trademark and to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this prospectus, including logos, artwork and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we or the applicable licensor will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entities.
Unless otherwise indicated, references in this prospectus to “$” or “United States dollars” are to United States dollars. Canadian dollars are referred as “Canadian dollars” or “C$”.
The high, low, average and closing rates for Canadian dollars in terms of the United States dollar for each of the periods indicated, as quoted by the Bank of Canada, were as follows:
| Year Ended June 30 | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
| High for period | C$ | 1.3039 | C$ | 1.3616 | C$ | 1.4496 | ||||||
| Average for the period | C$ | 1.2659 | C$ | 1.2823 | C$ | 1.3427 | ||||||
| Low for period | C$ | 1.2329 | C$ | 1.2040 | C$ | 1.2970 | ||||||
| Rate at end of period | C$ | 1.2886 | C$ | 1.2394 | C$ | 1.3628 | ||||||
On December 6, 2022, the Bank of Canada daily rate of exchange was $1.00 = C$1.3649 or C$1.00 = $0.7327.
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This summary highlights selected information contained in other parts of this prospectus. Because it is only a summary, it does not
contain all of the information that you should consider before investing in our securities and it is qualified in its entirety by, and
should be read in conjunction with, this entire prospectus and the information incorporated herein by reference to our other filings with
the Securities and Exchange Commission, or SEC. Investing in our securities involves a high degree of risk. You should carefully consider
the risks and uncertainties described herein or incorporated by reference herein, together with all of the other information in this prospectus,
including our financial statements and related notes, before investing in our securities. If any of the risks described herein or incorporated
by reference herein materialize, our business, financial condition, operating results and prospects could be materially and adversely
affected. In that event, the price of our securities could decline, and you could lose part or all of your investment.
Unless the context indicates otherwise, as used in this prospectus, the terms “we,” “us,” “our,” “our company,” “our business” or similar terms, refer to InMed Pharmaceuticals Inc., and our wholly-owned subsidiaries.
Overview
We are a clinical stage pharmaceutical company developing a pipeline of prescription-based products, including rare cannabinoids and novel cannabinoid analogs (together, Product Candidates) targeting the treatment of diseases with high unmet medical needs. We also have significant know-how in developing proprietary manufacturing approaches to produce cannabinoids for various market sectors, or Products.
We are developing multiple manufacturing approaches for synthesizing rare cannabinoids for potential use in pharmaceutical Product Candidates
and Products. Our know-how includes traditional approaches such as chemical synthesis and biosynthesis, as well as a proprietary, integrated
manufacturing approach called IntegraSynTM. We are dedicated to delivering new therapeutic alternatives to patients and consumers
who may benefit from cannabinoid-based products. Our approach leverages the several thousand years’ history of health benefits attributed
to the Cannabis plant and brings this anecdotal information into the 21st century by applying tried, tested and true scientific
approaches to establish non-plant-derived (synthetically manufactured), individual cannabinoids and cannabinoid analogs compounds as Product
Candidates in important market segments including clinically-proven, FDA-approved medicines and Products that are provided to wholesalers
and end-product manufacturers. While our activities do not involve the direct use of Cannabis or extracts from the plant, we note
that the U.S. Food and Drug Administration, or the FDA, has, to date, not approved any marketing application for Cannabis for the
treatment of any disease or condition and has approved only one Cannabis-derived and three Cannabis-related drug products.
Our ingredients are synthetically made and, therefore, we have no interaction with the Cannabis plant. We do not grow or utilize
Cannabis or its extracts in any of our Products or Product Candidates; our current pharmaceutical drug Product Candidates are applied
topically, although future drug candidates may utilize other routes of administration; and, we do not utilize tetrahydrocannabinol, or
THC, or cannabidiol, or CBD, the most common cannabinoid compounds that are typically extracted from the Cannabis plant, in any
of our Products or Product Candidates. The active pharmaceutical ingredient, or API, under development for our initial two drug candidates,
INM-755 for Epidermolysis bullosa, or EB, and INM-088 for glaucoma, is cannabinol, or CBN. Additional uses of both INM-755 and INM-088
are being explored, as well as the application of novel cannabinoid analogs as part of our INM-900 series program to treat diseases including
but not limited to neurodegenerative diseases such as Alzheimer’s, Parkinson’s and Huntington’s.
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We believe we are positioned to develop multiple pharmaceutical Product Candidates for diseases which may benefit from medicines based on rare cannabinoid compounds. Most currently approved cannabinoid therapies are based specifically on CBD and/or THC and are often delivered orally, which has limitations and drawbacks, such as side effects (including the intoxicating effects of THC). Currently, we intend to deliver our rare cannabinoid pharmaceutical drug candidates through various topical formulations (cream for dermatology, eye drops for ocular diseases) as a way of enabling treatment of the specific disease at the site of disease while seeking to minimize systemic exposure and any related unwanted systemic side effects, including any drug-drug interactions and any metabolism of the active pharmaceutical ingredient by the liver. The cannabinoid products sold through our B2B raw material supply business are integrated into various product formats by the companies who then further commercialize such products. We plan to access rare cannabinoids via all non-plant-based approaches, including chemical synthesis, biosynthesis and our proprietary integrated IntegraSynTM approach, thus negating any interaction with or exposure to the Cannabis plant.
Additional information concerning our company and our business is set forth in our most recent annual report on Form 10-K filed with the SEC, and our most recent quarterly report filed with the SEC subsequent to such annual report, both of which are incorporated herein by reference.
Corporate Information
We were originally incorporated in the Province of British Columbia, under the British Columbia Business Corporations Act, or BCBCA, on May 19, 1981 and we have undergone a number of corporate name and business sector changes since such incorporation, ultimately changing our name to “InMed Pharmaceuticals Inc.” on October 6, 2014 to signify our intent to specialize in cannabinoid pharmaceutical product development. On October 13, 2021, we acquired BayMedica Inc. (now named BayMedica LLC), or BayMedica. Upon the closing of the transaction, BayMedica became our wholly-owned subsidiary. Our principal executive offices are located at Suite 310 - 815 West Hastings Street, Vancouver, British Columbia, Canada, V6C 1B4, and our telephone number is (604) 669-7207. Our internet address is https://www.inmedpharma.com. The information contained in or accessible from our website is not incorporated into this prospectus, and you should not consider it part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.
Implications of Being an Emerging Growth Company and a Smaller Reporting Company
We are an “emerging growth company” as defined in the Securities Act of 1933, as amended, or the Securities Act, as modified
by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of exemptions from various
disclosure and reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to:
| ● | our exemption from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002; |
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| ● | being permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations, in each case, instead of three years; |
| ● | reduced disclosure obligations regarding executive compensation, including no Compensation Disclosure and Analysis; |
| ● | our exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; and |
| ● | our exemption from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. |
We may take advantage of these exemptions until we are no longer an emerging growth company. We will remain an emerging growth company until the earliest of (i) June 30, 2026, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our common shares held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We may choose to take advantage of some but not all of these exemptions. We have taken advantage of reduced reporting requirements in this prospectus and in the documents incorporated by reference into this prospectus. Accordingly, the information contained or incorporated by reference herein may be different from the information you receive from other public companies in which you hold stock.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period and, as a result, we may adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-public companies instead of the dates required for other public companies.
We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that our voting and non-voting common shares held by non-affiliates is $250 million or more, as measured on the last business day of our second fiscal quarter, or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting and non-voting common shares held by non-affiliates is $700 million or more, as measured on the last business day of our second fiscal quarter.
Recent Developments
Reverse Stock Split
Effective September 7, 2022, we effected a 1-for-25 share consolidation, or the Reverse Stock Split, of all our issued and outstanding common shares. As a result of the Reverse Stock Split, each 25 of our common shares issued and outstanding pre-consolidation were automatically combined and converted into one share post-share consolidation. Unless otherwise indicated, all share numbers in this prospectus, including common shares and all securities convertible into common shares, give effect to the Reverse Stock Split.
November Private Placement
On November 21, 2022, we consummated a private placement with the Selling Shareholders pursuant to which we issued (i) 150,000 common shares, (ii) pre-funded warrants to purchase up to 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. We refer to this private placement in this prospectus as the November Private Placement. In connection with the November Private Placement, the Selling Shareholders agreed to cancel preferred investment options to purchase up to an aggregate of 1,383,490 of our common shares which had been previously issued to the Selling Shareholders.
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The pre-funded warrants issued in the November Private Placement have an exercise price of $0.0001 per pre-funded warrant, are currently exercisable and do not expire. The terms of the pre-funded warrants preclude a holder thereof from exercising such holder’s pre-funded warrants, and us 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 of the Selling Shareholders, 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 Selling Shareholder, 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 Selling Shareholders in the November Private Placement have an exercise price of $3.044 per share, are currently exercisable and will expire seven years from the date of issuance. The terms of the preferred investment options issued to the Selling Shareholders preclude a holder thereof from exercising such holder’s preferred investment option, and us 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 upon such exercise.
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 November Private Placement, we entered into a registration rights agreement with the Selling Shareholders, or the Registration Rights Agreement, which grants the Selling Shareholders certain registration rights and obligates us to file one or more registration statements with the SEC by certain dates, covering the resale of the common shares sold in the November Private Placement and the common shares issuable upon exercise of the pre-funded warrants and preferred investment options sold in the November Private Placement. The common shares issued to the Selling Shareholders in the November Private Placement and the common shares underlying the pre-funded warrants and preferred investment options issued to the Selling Shareholders in the November Private Placement are the common shares being registered for resale pursuant to this prospectus, in accordance with the Registration Rights Agreement.
In connection with the November Private Placement, we also issued preferred investment options to purchase up to an aggregate of 118,182 of our common shares to designees of the exclusive placement agent for the November Private Placement. Such preferred investment options have an exercise price of $4.125 per share, are currently exercisable and will expire seven years from the date of issuance. A holder of the preferred investment options issued to the designees of the placement agent is precluded from exercising such holder’s preferred investment option, and we are 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 upon such exercise.
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The Offering
| Securities Offered by the Selling Shareholders | 5,090,918 common shares consisting of (i) 150,000 common shares issued in the November Private Placement, (ii) 1,668,185 common shares issuable upon exercise of pre-funded warrants issued in the November Private Placement and (iii) 3,272, 733 common shares issuable upon the exercise of preferred investment options issued to the Selling Shareholders in the November Private Placement. | |
| Common Shares Outstanding Before this Offering | 908,761 (1) | |
| Common Shares Outstanding After this Offering (assuming full exercise of the pre-funded warrants and preferred investment options exercisable for common shares registered hereby) | 5,999,679 | |
| Use of Proceeds | We will not receive any of the proceeds from the sale of common shares being offered for sale by the Selling Shareholders. However, upon (i) the cash exercise of the pre-funded warrants we will receive the exercise price of such warrants, for an aggregate amount of approximately $166.82 and (ii) the cash exercise of the preferred investment options, we will receive the exercise price of such options, for an aggregate amount of approximately $10.0 million. See “Use of Proceeds” for further information. | |
| Nasdaq Capital Market Symbol | “INM”. | |
| Risk Factors | Please read “Risk Factors” and other information included in, or incorporated by reference into, this prospectus, for a discussion of factors you should carefully consider before deciding to invest in the securities offered pursuant to this prospectus. |
| (1) | The number of common shares outstanding before this offering is based on an aggregate of 908,761 shares outstanding as of September 30, 2022 and does not include: |
| ● | 77,645 common shares issuable upon the exercise of non-prefunded share purchase warrants outstanding as of September 30, 2022, with a weighted average exercise price of $104.14 per share; |
| ● | 601,245 common shares issuable upon the exercise of pre-funded warrants outstanding as of September 30, 2022, with a weighted average exercise price of $0.0001 per share; |
| ● | 1,442,573 common shares issuable upon the exercise of preferred investment options outstanding as of September 30, 2022, with a weighted average exercise price of $8.71 per share, of which preferred investment options to purchase 1,383,490 have since been cancelled; |
| ● | 53,466 common shares issuable upon exercise of options outstanding as of September 30, 2022, with a weighted-average exercise price of $124.74 per share; and |
| ● | 20,300 common shares available for future issuance as of September 30, 2022, under the InMed Pharmaceuticals Inc. Amended 2017 Stock Option Plan. |
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Investing in our common shares involves a high degree of risk and uncertainties. You should carefully consider the following risk described below, together with the information under the heading “Risk Factors” and elsewhere in our most recent Annual Report on Form 10-K, which is incorporated herein by reference, as updated or superseded by the risks and uncertainties described under similar headings or elsewhere in the other documents that are filed after the date hereof and incorporated by reference into this prospectus, together with all of the other information contained or incorporated by reference in this prospectus, and any free writing prospectus that we have authorized for use in connection with this offering before you make a decision to invest in our common shares. The risks described in these documents are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be materially adversely affected. This could cause the trading price of our common shares to decline, resulting in a loss of all or part of your investment. Please also carefully read the section titled “Special Note Regarding Forward-Looking Statements.”
Additional Risk Related to this Offering and Our Common Shares
Sales by the Selling Shareholders of the
common shares covered by this prospectus could adversely affect the market price of our common shares.
Assuming full exercise of the pre-funded warrants and the preferred investment options the underlying common shares of which form a part of the common shares being registered hereby, and without giving effect to the beneficial ownership limitations related to the pre-funded warrants and preferred investment options described elsewhere in this prospectus, the 5,090,918 common shares registered hereby represent approximately 560.2% of our total outstanding shares of common shares as of September 30, 2022. The resale of all or a substantial number of these shares in the public market by the Selling Shareholders, or the perception that such sales might occur, could depress the market price of our common shares, which could impair our ability to raise capital through the sale of additional equity or equity-linked securities.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contain forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements, other than statements of historical facts contained herein or in the documents incorporated herein by reference may be deemed forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in or incorporated by reference into this prospectus include, but are not limited to, statements about:
| ● | Our researching, developing, manufacturing and commercializing cannabinoid-based biopharmaceutical products will treat diseases with high unmet medical needs; |
| ● | The continued optimization of cannabinoid manufacturing approaches; |
| ● | Our success in initiating discussions with potential partners for licensing various aspects of our Product Candidates; |
| ● | Our ability to commercialize and, where required, register Product Candidates and Products in the United States and other jurisdictions; |
| ● | Our ability to successfully access existing manufacturing capacity via leases with third parties or to transfer our manufacturing processes to contract manufacturing organizations; |
| ● | Our belief that our manufacturing approaches that we are developing are robust and effective and will result in high yields of cannabinoids and will be a significant improvement upon existing manufacturing platforms; |
| ● | Our belief that that INM-755 offers specific advantages and will prove to provide the extensive relief symptomology with the added potential of addressing the underlying disease in Epidermolysis Bullosa, or EB; |
| ● | The structure and timing of future INM-755 studies including that we will complete patient enrollment into our Phase II study in EB in 2022; |
| ● | The ability of the IntegraSynTM approach to introduce a revenue stream to us before the expected commercial approval of our therapeutic programs; |
| ● | Our ability to advance the INM-900 series program for the treatment of neurodegenerative diseases; |
| ● | The potential of selected cannabinoid analogs in the INM-900 series program to inhibit or slow progression of neurodegenerative disease in a population of affected neurons; |
| ● | Our ability to successfully scale up our IntegraSynTM or other cost-effective approaches so that it will be commercial-scale ready after Phase II clinical trials are completed, after which time we may no longer need to source APIs from API manufacturers; |
| ● | The success of the key next steps in our manufacturing approaches, including continuing efforts to diversify the number of cannabinoids produced, scaling-up the processes to larger vessels and identifying external vendors to assist in the commercial scale-up of the process; |
| ● | Our ability to successfully make determinations as to which research and development programs to continue based on several strategic factors; |
| ● | Our ability to monetize our IntegraSynTM manufacturing approach to the broader pharmaceutical industry; |
| ● | Our ability to continue to outsource the majority of our research and development activities through scientific collaboration agreements and arrangements with various scientific collaborators, academic institutions and their personnel; |
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| ● | The success of work to be conducted under the research and development collaboration between us and various contract development and manufacturing organizations; |
| ● | Our ability to develop our therapies through early human testing; |
| ● | Our ability to evaluate the financial returns on various commercialization approaches for our Product Candidates, such as a ‘go it-alone’ commercialization effort, out-licensing to third parties, or co-promotion agreements with strategic collaborators; |
| ● | Our ability to oversee clinical trials for INM-755 in EB and building the requisite internal commercialization infrastructure to self-market the product to EB clinics; |
| ● | Our ability to find a partnership early in the development process for INM-088 in glaucoma; |
| ● | Our ability to explore our manufacturing technologies as processes which may confer certain benefits, either cost, yield, speed, or all of the above, when pursuing specific types of cannabinoids, and filing a provisional patent application for same; |
| ● | Plans regarding our next steps, options, and targeted benefits of our manufacturing technologies; |
| ● | Our IntegraSynTM or BayMedica derived products being bio-identical to the naturally occurring cannabinoids, and offering superior ease, control and quality of manufacturing when compared to alternative methods; |
| ● | Our ability to potentially earn revenue from our IntegraSynTM approach by (i) becoming a supplier of APIs to the pharmaceutical industry and/or (ii) providing pharmaceutical-grade ingredients to the non-pharmaceutical market; |
| ● | Our plans to work closely with regulatory authorities and clinical experts in developing the clinical program for INM-755; |
| ● | Our ability to successfully prosecute patent applications; |
| ● | Our ability to complete formulation development and scale-up, conduct additional preclinical studies, and initiate and complete IND/CTA-enabling toxicology studies in calendar year 2023 for INM-088; |
| ● | INM-088 being a once-a-day or twice-a-day eye drop medication that will compete with treatment modalities in the medicines category, and with the potential of INM-088 assisting in reducing the high rate of non-adherence with current glaucoma therapies; |
| ● | Our belief that with a novel delivery system, the reduction of intraocular pressure (IOP) and/or providing neuroprotection in glaucoma patients by topical (eye drop) application of cannabinoids will hold significant promise as a new therapy; |
| ● | The potential for any of our patent applications to provide intellectual property protection for us; |
| ● | Our ability to secure insurance coverage for shipping and storage of Product Candidates, and clinical trial insurance; |
| ● | Our ability to expand our insurance coverage to include the commercial sale of Products and Product Candidates; |
| ● | Developing patentable New Chemical Entities which, if issued, will confer market exclusivity to us for the potential development into pharmaceutical Product Candidates, license, partner or sell to interested external parties; |
| ● | Our ability to initiate discussions and conclude strategic partnerships to assist with development of certain programs; |
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| ● | Our ability to position ourselves to achieve value-driving, near-term milestones for our Product Candidates with limited investment; |
| ● | Our ability to execute our business strategy; |
| ● | Critical accounting estimates; |
| ● | Management’s assessment of future plans and operations; |
| ● | The outlook of our business and the global economic and geopolitical conditions; and |
| ● | The competitive environment in which we and our business units operate. |
These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this prospectus or the dates of the documents incorporated herein by reference, as applicable, and are subject to risks and uncertainties. We discuss many of these risks in greater detail under “Risk Factors” in this prospectus and under similar headings in the documents incorporated herein by reference. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in or implied by any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
You should read this prospectus, the documents incorporated by reference herein and the documents that we reference in this prospectus and have filed as exhibits to the registration statement of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in or incorporated by reference into this prospectus by these cautionary statements. Except as required by law, each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
We will not receive any proceeds from the sale of common shares by the Selling Shareholders. However, upon (i) the cash exercise of the pre-funded warrants, we will receive the exercise price of such warrants, for an aggregate of approximately $166.82 and (ii) the cash exercise of the preferred investment options, we will receive the exercise price of such options, for an aggregate of approximately $10.0 million. We will bear all fees and expenses incident to our obligation to register the common shares covered by this prospectus. Brokerage fees, underwriting discounts and commissions, and similar expenses, if any, attributable to the sale of common shares offered hereby will be borne by the applicable Selling Shareholder.
We have never declared or paid any cash dividends on our common shares to date. We do not anticipate declaring or paying, in the foreseeable future, any cash dividends on our common shares. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. Any future determination related to our dividend policy will be made at the discretion of our board of directors, or our Board, and will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our Board may deem relevant.
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The table below sets forth certain information known to us regarding the beneficial ownership of our common shares as of November 21, 2022 by:
| ● | each person, or group of affiliated persons, known by us to be the beneficial owner of more than 5% of our outstanding common shares; |
| ● | each of our directors and named executive officers; and |
| ● | all our directors and executive officers as a group. |
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security. Under those rules, beneficial ownership includes securities that the person has the right to acquire, such as through the exercise of options or warrants, within 60 days of November 21, 2022. Common shares subject to options, warrants or other convertible securities that are currently exercisable or exercisable within 60 days of November 21, 2022 are considered outstanding and beneficially owned by the person holding such options, warrants or other convertible securities for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Except as noted by footnote, and subject to community property laws where applicable, based on the information provided to us, we believe that the persons named in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them. The percentage of beneficial ownership of our common shares is calculated based on 1,589,987 common shares issued and outstanding as of November 21, 2022.
Unless otherwise noted, the business address of each of the individuals and entities listed in the table below is Suite 310 - 815 West Hastings Street, Vancouver, British Columbia, Canada, V6C 1B4.
| Name and Address of Beneficial Owner | Number of Common Shares Beneficially Owned | Percentage of Common Shares Beneficially Owned (%) | ||||||
| Five Percent Shareholders: | ||||||||
| Armistice Capital Master Fund Ltd. | 3,388,244 | (1) | 9.99 | (2) | ||||
| Sabby Volatility Warrant Master Fund, Ltd. | 2,171,191 | (3) | 4.99 | (4) | ||||
| Named Executive Officers and Directors: | ||||||||
| Eric A. Adams(5) | 13,361 | * | ||||||
| Alexandra Mancini(6) | 3,492 | * | ||||||
| Eric Hsu(7) | 4,029 | * | ||||||
| Bruce Colwill(8) | 5,273 | * | ||||||
| William J. Garner(9) | 644 | * | ||||||
| Andrew Hull(10) | 1,402 | * | ||||||
| Janet Grove(11) | 176 | * | ||||||
| Bryan Baldasare(12) | 128 | * | ||||||
| Nicole Lemerond(13) | 80 | * | ||||||
| All other executive officers as a group(14) | 3,475 | * | ||||||
| All executive officers and directors as a group (11 persons)(15) | 32,060 | 1.98 | ||||||
| * | Less than 1%. |
| (1) | Consists of (i) 150,000 common shares, (ii) 910,610 common shares issuable upon presently exercisable pre-funded warrants, and (iii) 2,327,634 common shares issuable upon presently exercisable preferred investment options. The terms of the pre-funded warrants preclude a holder thereof from exercising such holder’s pre-funded warrants, 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 9.99% of the number of common shares outstanding immediately after giving effect to the issuance of common shares upon such exercise. The terms of the preferred investment options preclude a holder thereof from exercising such holder’s preferred investment option or warrant, 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% of the number of common shares outstanding immediately after giving effect to the issuance of common shares upon such exercise. The securities are directly held by Armistice Capital Master Fund Ltd., a Cayman Islands exempted company, and may be deemed to be indirectly beneficially owned by (i) Armistice Capital, LLC, as the investment manager of Armistice Capital Master Fund Ltd. and (ii) Steven Boyd, as the Managing Member of Armistice Capital, LLC. Armistice Capital, LLC and Steven Boyd disclaim beneficial ownership of the securities except to the extent of their respective pecuniary interests therein. The address for the foregoing entities is c/o Armistice Capital, LLC, 510 Madison Avenue, 7th Floor, New York, NY 10022. |
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| (2) | Based solely on the 150,000 common shares beneficially owned and 9,750 of the 910,610 common shares underlying presently exercisable pre-funded warrants, and does not include 900,860 of the 910,610 common shares issuable upon presently exercisable pre-funded warrants and the 2,327,634 common shares issuable upon presently exercisable preferred investment options, the exercise of which pre-funded warrants and preferred investment options are subject to the beneficial ownership limitations discussed in footnote 1 above and elsewhere in this prospectus. |
| (3) | Consists of (i) 49,981 common shares, (ii) 757,575 common shares issuable upon exercise of presently exercisable pre-funded warrants and (iii) 1,363,635 common shares issuable upon exercise of presently exercisable preferred investment options. The terms of the pre-funded warrants and preferred investment options preclude a holder thereof from exercising such holder’s pre-funded warrant or preferred investment option, 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 such exercise. Sabby Management, LLC is the investment manager of Sabby Volatility Warrant Master Fund, Ltd. and shares voting and investment power with respect to these shares in this capacity. As manager of Sabby Management, LLC, Hal Mintz also shares voting and investment power on behalf of Sabby Volatility Warrant Master Fund, Ltd. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities listed except to the extent of their pecuniary interest therein. |
| (4) | Based solely on the 49,981 common shares beneficially owned and 30,900 of the 757,575 common shares underlying presently exercisable pre-funded warrants, and does not include 726,675 of the 757,575 common shares issuable upon exercise of presently exercisable pre-funded warrants and the 1,363,635 common shares issuable upon exercise of presently exercisable preferred investment options, the exercise of which pre-funded warrants and preferred investment options are subject to the beneficial ownership limitations discussed in footnote 3 above and elsewhere in this prospectus. |
| (5) | Consists of (i) 2,359 common shares and (ii) 11,002 common shares issuable pursuant to options presently exercisable or exercisable within 60 days of November 21, 2022. Not reflected in the table are 597 common shares beneficially owned by Mr. Adams’ spouse. Mr. Adams disclaims beneficial ownership in the 597 common shares held by his spouse. |
| (6) | Consists of (i) 240 common shares and (ii) 3,252 common shares issuable pursuant to options presently exercisable or exercisable within 60 days of November 21 , 2022. |
| (7) | Consists of (i) 51 common shares and (ii) 3,978 common shares issuable pursuant to options presently exercisable or exercisable within 60 days of November 21 , 2022. |
| (8) | Consists of (i) 461 common shares and (ii) 4,812 common shares pursuant to options presently exercisable or exercisable within 60 days of November 21, 2022. Mr. Colwill resigned from his position as the Chief Financial Officer effective March 31, 2022, and transitioned to the role of an advisor of our company until June 30, 2022. |
| (9) | Consists of 644 common shares issuable pursuant to options presently exercisable or exercisable within 60 days of November 21, 2022. Not reflected in the table are 152 common shares beneficially owned by Dr. Garners’ spouse. Dr. Garner disclaims beneficial ownership in the 152 common shares held by his spouse. |
| (10) | Consists of (i) 758 common shares and (ii) 644 common shares issuable pursuant to options presently exercisable or exercisable within 60 days of November 21, 2022. |
| (11) | Consists of 176 common shares issuable pursuant to options presently exercisable or exercisable within 60 days of November 21, 2022. |
| (12) | Consists of 128 common shares issuable pursuant to options presently exercisable or exercisable within 60 days of November 21, 2022. |
| (13) | Consists of 80 common shares issuable pursuant to options presently exercisable or exercisable within 60 days of November 21, 2022. |
| (14) | Consists of (i) 21 common shares and (ii) 3,454 common shares issuable pursuant to options presently exercisable or exercisable within 60 days of November 21, 2022. |
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 11, 2022, our Board appointed Janet Grove as a member of the Board. Ms. Grove is a Partner of Norton Rose Fulbright Canada LLP. From February 11, 2022 to December 7, 2022, Norton Rose Fulbright Canada LLP rendered legal services in the amount of $191,916 to our company. These transactions were in the normal course of operations and were measured at the exchange amount which represented the amount of consideration established and agreed to by Norton Rose Fulbright Canada LLP.
Except as disclosed above, and except for compensation
arrangements for our directors and executive officers, which are disclosed in documents incorporated by reference into this prospectus,
since July 1, 2019, there has not been and there is not currently proposed, any transaction or series of similar transactions to which:
| ● | we were, or will be, a participant; |
| ● | the amount involved exceeded, or will exceed, $120,000; and |
| ● | in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest. |
Indemnification Agreements
Our Amended and Restated Articles, or our Articles, contain provisions limiting the liability of directors and provide that we will indemnify each of our directors and officers to the fullest extent permitted under law. In addition, we have entered into an indemnification agreement with each of our directors, which requires us to indemnify them.
Policies and Procedures for Transactions with Related Persons
We have adopted a written policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our common shares and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related person transaction with us without the approval or ratification of our Board or the audit committee of our Board. Any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of any class of our capital stock, or any member of the immediate family of any of the foregoing persons, in which the amount involved exceeds $120,000 and such person would have a direct or indirect interest, must be presented to our Board or the Board’s audit committee for review, consideration and approval. In approving or rejecting any such proposal, our Board or its audit committee is to consider the material facts of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
General
Our authorized share capital consists of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value. As of the date of this prospectus, we had 1,589,987 common shares issued and outstanding and no preferred shares issued and outstanding.
The description of our securities contained herein is a summary only and may be exclusive of certain information that may be important to you. For more complete information, you should read our Articles, which have been filed with the SEC and incorporated as an exhibit to the registration statement of which this prospectus forms a part.
Common Shares
Each common share entitles the holder thereof to one vote at all meetings of shareholders.
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There are no limitations on the rights of non-Canadian owners to hold or vote common shares.
In the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, or other distribution of our assets among shareholders for the purpose of winding up our affairs, subject to the rights, privileges and restrictions attaching to any preferred shares that may then be outstanding, the shareholders shall be entitled to receive our remaining property.
The shareholders are entitled to receive dividends, as and when declared by our Board, subject to the rights, privileges and restrictions attaching to our securities, which may be paid in money, property or by the issue of fully paid shares in our capital. However, we do not anticipate paying any cash dividends for the foreseeable future, and instead intend to retain future earnings, if any, for use in the operation and expansion of our business.
Pre-Funded
Warrants and Preferred Investment Options
The pre-funded warrants and preferred investment options, the underlying shares of which form a part of the common shares being registered hereby, and preferred investment options issued to the designees of the November Private Placement, are described under “Prospectus Summary—Recent Developments—November Private Placement.”
As of November 21, 2022, we had 1,738,204 pre-funded warrants outstanding and 3,450,998 preferred investment options and other warrants outstanding.
Certain Takeover Bid Requirements
Unless such offer constitutes an exempt transaction, an offer made by a person to acquire outstanding shares of a Canadian entity that, when aggregated with the offeror’s holdings (and those of persons or companies acting jointly with the offeror), would constitute 20% or more of the outstanding shares, would be subject to the take-over provisions of Canadian securities laws. The foregoing is a limited and general summary of certain aspects of applicable securities law in the provinces and territories of Canada, all in effect as of the date hereof.
In addition to the take-over bid requirements noted above, the acquisition of shares may trigger the application of additional statutory regimes including amongst others, the Investment Canada Act and the Competition Act.
This summary is not a comprehensive description of relevant or applicable considerations regarding such requirements and, accordingly, is not intended to be, and should not be interpreted as, legal advice to any prospective purchaser and no representation with respect to such requirements to any prospective purchaser is made. Prospective investors should consult their own Canadian legal advisors with respect to any questions regarding securities law in the provinces and territories of Canada.
Actions Requiring a Special Majority
Under the BCBCA, unless otherwise stated in the Articles, certain corporate actions require the approval of a special majority of shareholders, meaning holders of shares representing 662/3% of those votes cast in respect of a shareholder vote addressing such matter. Those items requiring the approval of a special majority generally relate to fundamental changes with respect to our business, and include amongst others, resolutions: (i) removing a director prior to the expiry of his or her term; (ii) altering the Articles, (iii) approving an amalgamation; (iv) approving a plan of arrangement; and (v) providing for a sale of all or substantially all of our assets.
Transfer Agent and Registrar
The transfer agent and registrar for our common shares is Computershare Investor Services Inc., 100 University Avenue, 9th Floor, Toronto, Ontario, Canada M5J 2Y1.
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Listing
Our common shares are currently quoted under the symbol “INM” on the Nasdaq Capital Market.
Holders
As of October 24 , 2022, there were 3,743 holders of record of our issued and outstanding common shares.
The common shares being offered by the Selling Shareholders are those previously issued to the Selling Shareholders, and those issuable to the Selling Shareholders upon exercise of the pre-funded warrants and preferred investment options, in each case, issued to the Selling Shareholders in the November Private Placement. For additional information regarding the issuances of those common shares, pre-funded warrants and preferred investment options, see “Prospectus Summary—Recent Developments—November Private Placement” above. We are registering the common shares in order to permit the Selling Shareholders to offer the shares for resale from time to time. Except for participation in our previous offerings and the ownership of the common shares, the pre-funded warrants and the preferred investment options, the Selling Shareholders have not had any material relationship with us within the past three years.
The table below lists the Selling Shareholders and other information regarding the beneficial ownership of our common shares by each of the Selling Shareholders. The second column lists the number of common shares beneficially owned by each Selling Shareholder, based on its ownership of the common shares, warrants and preferred investment options, as of the date of this prospectus, assuming exercise of the pre-funded warrants and preferred investment options held by the Selling Shareholders on that date, without regard to any limitations on exercises.
The third column lists the common shares being offered by this prospectus by the Selling Shareholders.
In accordance with the terms of the Registration Rights Agreement, this prospectus generally covers the resale of the sum of (i) the number of common shares issued to the Selling Shareholders in the November Private Placement and (ii) the maximum number of common shares issuable upon exercise of the pre-funded warrants and preferred investment options issued to the Selling Shareholders in the November Private Placement, determined as if the outstanding pre-funded warrants and preferred investment options were exercised in full as of the trading day immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediately preceding the applicable date of determination and all subject to adjustment as provided in the Registration Right Agreement, without regard to any limitations on the exercise of the pre-funded warrants and preferred investment options.
The table is based on information supplied to us by the Selling Shareholders, with beneficial ownership determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to common shares. This information does not necessarily indicate beneficial ownership for any other purpose. In computing the number of common shares beneficially owned by a Selling Shareholder, common shares subject to warrants or preferred investment options held by that Selling Shareholder that are currently exercisable for common shares or exercisable for common shares within 60 days after the date of this prospectus, are deemed outstanding.
The terms of the pre-funded warrants and preferred investment options contain certain beneficial ownership limitations, as more particularly described under “Prospectus Summary—Recent Developments—November Private Placement” and in the footnotes to the table below. The number of shares in the second column does not reflect these limitations. The Selling Shareholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
| Name of Selling Shareholder | Number of Common Shares Beneficially Owned Prior to Offering |
Maximum Number of Common Shares to be Sold Pursuant to this Prospectus |
Number of Common Shares Beneficially Owned After Offering(5) |
Percentage Beneficially Owned After Offering)(5) |
||||||||||||
| Sabby Volatility Warrant Master Fund, Ltd.(1) | 2,171,191 | (2) | 2,121,210 | — | — | |||||||||||
| Armistice Capital Master Fund Ltd.(3) | 3,388,244 | (4) | 2,969,708 | — | — | |||||||||||
| (1) | Sabby Management, LLC is the investment manager of Sabby Volatility Warrant Master Fund, Ltd. and shares voting and investment power with respect to these shares in this capacity. As manager of Sabby Management, LLC, Hal Mintz also shares voting and investment power on behalf of Sabby Volatility Warrant Master Fund, Ltd. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities listed except to the extent of their pecuniary interest therein. |
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| (2) | Consists of (i) 49,981 common shares, (ii) 757,575 common shares issuable upon the exercise of pre-funded warrants issued in the November Private Placement and (iii) 1,363,635 common shares issuable upon the exercise of preferred investment options issued in the November Private Placement. The terms of the pre-funded warrants and preferred investment options preclude a holder thereof from exercising such holder’s pre-funded warrant or preferred investment option, 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 such exercise. |
| (3) | The securities are directly held by Armistice Capital Master Fund Ltd., a Cayman Islands exempted company, and may be deemed to be indirectly beneficially owned by (i) Armistice Capital, LLC, as the investment manager of Armistice Capital Master Fund Ltd. and (ii) Steven Boyd, as the Managing Member of Armistice Capital, LLC. Armistice Capital, LLC and Steven Boyd disclaim beneficial ownership of the securities except to the extent of their respective pecuniary interests therein. |
| (4) | Consists of (i) 150,000 common shares issued in the November Private Placement, (ii) 910,610 common shares issuable upon the exercise of pre-funded warrants issued in the November Private Placement and (iii) 2,327,634 common shares issuable upon presently exercisable preferred investment options (1,909,098 of which preferred investment options were issued in the November Private Placement). The terms of the pre-funded warrants preclude a holder thereof from exercising such holder’s pre-funded warrants, 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 9.99% of the number of common shares outstanding immediately after giving effect to the issuance of common shares upon such exercise. The terms of the preferred investment options preclude a holder thereof from exercising such holder’s preferred investment option, 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% of the number of common shares outstanding immediately after giving effect to the issuance of common shares upon such exercise. |
| (5) | Because the Selling Shareholders may sell, transfer or otherwise dispose of all, some or none of the common shares covered by this prospectus, we cannot determine the number of such common shares that will be sold, transferred or otherwise disposed of by the Selling Shareholders, or the amount or percentage of our common shares that will be held by the Selling Shareholders upon completion of this offering. For purposes of this table, we have assumed that the Selling Shareholders will sell all their common shares covered by this prospectus, including common shares issuable upon exercise of the pre-funded warrants and preferred investment options issued in the November Private Placement. |
15
Each Selling Shareholder of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the Nasdaq Capital Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Shareholder may use any one or more of the following methods when selling securities:
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately negotiated transactions; |
| ● | settlement of short sales; |
| ● | in transactions through broker-dealers that agree with the Selling Shareholders to sell a specified number of such securities at a stipulated price per security; |
| ● | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| ● | a combination of any such methods of sale; or |
| ● | any other method permitted pursuant to applicable law. |
The
Selling Shareholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act, if available,
rather than under this prospectus.
Broker-dealers
engaged by the Selling Shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Shareholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)
in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in
excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or
markdown in compliance with FINRA Rule 2121.
In connection with the sale of the securities or interests therein, the Selling Shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Shareholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
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The
Selling Shareholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters”
within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Each Selling Shareholder has informed us that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the securities.
We are required to pay certain fees and expenses incurred by us incident to the registration of the securities. We have agreed to indemnify the Selling Shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Shareholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for us to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common shares for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common shares by the Selling Shareholders or any other person. We will make copies of this prospectus available to the Selling Shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
Norton Rose Fulbright US LLP, which has acted as our United States counsel in connection with this offering, will pass on certain legal matters with respect to United States federal law in connection with this offering. Norton Rose Fulbright Canada LLP, which has acted as our Canadian counsel in connection with this offering, will pass on certain legal matters with respect to Canadian law in connection with this offering.
The consolidated financial statements of InMed Pharmaceuticals Inc. as of June 30, 2022 and 2021, and for each of the years in the two-year period ended June 30, 2022 have been incorporated by reference herein in reliance upon the report of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The audit report covering the June 30, 2022 consolidated financial statements contains an explanatory paragraph that states that the Company has incurred recurring losses and negative cash flows and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.
17
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common shares offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our common shares, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit.
We are subject to the periodic reporting requirements of the Exchange Act and in accordance therewith file periodic reports, including, but not limited to, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, proxy statements and other information filed or furnished with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act. You may read and copy (at prescribed rates) any such reports, proxy statements and other information at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. The SEC maintains an internet website that contains reports, proxy and information statements and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov. We also maintain a website at www.inmedpharma.com, by which you may access these materials (including the documents incorporated into this prospectus by reference) free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information that is contained on, or that may be accessed through, our website is not incorporated into this prospectus, and you should not consider it part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
SEC rules permit us to “incorporate by reference” certain information into this prospectus, which means that we can disclose important information about us by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be a part of this prospectus, except for information superseded by information contained in this prospectus or in any subsequently filed incorporated document. Because we are incorporating by reference future filings with the SEC, this prospectus is continually updated and those future filings may modify or supersede some of the information included or incorporated in this prospectus. This means that you must carefully review all of the SEC filings that we incorporate by reference to determine if any of the statements in this prospectus or in any document previously incorporated by reference have been modified or superseded. However, we undertake no obligation to update or revise any statements we make, except as required by law.
This prospectus incorporates by reference the documents listed below and any filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (in each case, other than those documents or the portions of those documents furnished and not filed with the SEC) on or after the date of this prospectus and prior to the termination of the offering covered by this prospectus:
| ● | our Annual Report on Form 10-K for the fiscal year ended June 30, 2022, filed with the SEC on September 23, 2022, as amended by Amendment No. 1 on Form 10-K/A filed with the SEC on September 28, 2022; |
| ● | our Definitive Proxy Statement on Schedule 14A, filed with the SEC on October 28, 2022; |
| ● | our
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022, filed with
the SEC on November
14, 2022; and |
| · | our Current Reports on Form 8-K, filed with the SEC on July 18, 2022, July 20, 2022, August 11, 2022, August 26, 2022, September 14, 2022, September 29, 2022, November 15, 2022, November 17, 2022 and November 22, 2022 (except, in each case, any information, including exhibits, furnished and not filed with the SEC). |
Any statement contained herein or in a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed to be modified or superseded to the extent that a statement contained in this prospectus or in any subsequently filed document which is or is deemed to be incorporated by reference in this prospectus modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
We will furnish without charge to each person, including any beneficial owner, to whom a prospectus is delivered, upon written or oral request, a copy of any or all of the documents incorporated by reference, including exhibits to these documents. Any such request may be made by writing or calling us at the following address or phone number:
InMed Pharmaceuticals Inc.
Suite
310 – 815 W. Hastings Street
Vancouver, BC, Canada
V6C 1B4
(604) 669-7207
Attention: Sarah Li
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5,090,918 Common Shares
PROSPECTUS
, 2022
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
Set forth below is an estimate (except in the case of the registration fee) of the amount of fees and expenses to be incurred in connection with the issuance and distribution of the offered securities, other than underwriting discounts and commissions. The Selling Shareholders will not bear any portion of the below expenses.
| SEC registration fee | $ | 1,369.00 | ||
| Printing fees and expenses | * | |||
| Legal fees and expenses | * | |||
| Accounting fees and expenses | * | |||
| Transfer agent fees and expenses | * | |||
| Miscellaneous fees and expenses | * | |||
| Total | $ | * |
| * | These fees are calculated based on the number of issuances and amount of securities offered and accordingly cannot be estimated at this time. |
Item 14. Indemnification of Directors and Officers
We are subject to the provisions of Part 5, Division 5 of the BCBCA. Under Section 160 of the BCBCA, we may, subject to Section 163 of the BCBCA:
| (1) | indemnify an individual who: |
| ● | is or was a director or officer of our company; |
| ● | is or was a director or officer of another corporation (i) at a time when such corporation is or was an affiliate of our company; or (ii) at our request, or |
| ● | at our request, is or was, or holds or held a position equivalent to that of, a director or officer of a partnership, trust, joint venture or other unincorporated entity, and including, subject to certain limited exceptions, the heirs and personal or other legal representatives of that individual (collectively, an “eligible party”), against all eligible penalties to which the eligible party is or may be liable; and |
| (2) | after final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by an eligible party in respect of that proceeding, where: |
| ● | “eligible penalty” means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of, and eligible proceeding. |
| ● | “eligible proceeding” means a proceeding in which an eligible party or any of the heirs and personal or other legal representatives of the eligible party, by reason of the eligible party being or having been a director or officer of, or holding or having held a position equivalent to that of a director or officer of, our company or an associated corporation (i) is or may be joined as a party, or (ii) is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding. |
| ● | “proceeding” includes any legal proceeding or investigative action, whether current, threatened, pending or completed. |
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Under Section 161 of the BCBCA, and subject to Section 163 of the BCBCA, we must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by an eligible party in respect of that proceeding if the eligible party (i) has not been reimbursed for those expenses, and (ii) is wholly successful, on the merits or otherwise, in the outcome of the proceeding or is substantially successful on the merits in the outcome of the proceeding.
Under Section 162 of the BCBCA, and subject to Section 163 of the BCBCA, we may pay, as they are incurred in advance of the final disposition of an eligible proceeding, the expenses actually and reasonably incurred by an eligible party in respect of the proceeding, provided that we must not make such payments unless we first receive from the eligible party a written undertaking that, if it is ultimately determined that the payment of expenses is prohibited under Section 163 of the BCBCA, the eligible party will repay the amounts advanced.
Under Section 163 of the BCBCA, we must not indemnify an eligible party against eligible penalties to which the eligible party is or may be liable or pay the expenses of an eligible party in respect of that proceeding under Sections 160, 161 or 162 of the BCBCA, as the case may be, if any of the following circumstances apply:
| ● | if the indemnity or payment is made under an earlier agreement to indemnify or pay expenses and, at the time that the agreement to indemnify or pay expenses was made, we were prohibited from giving the indemnity or paying the expenses by our memorandum or articles; |
| ● | if the indemnity or payment is made otherwise than under an earlier agreement to indemnify or pay expenses and, at the time that the indemnity or payment is made, we are prohibited from giving the indemnity or paying the expenses by our memorandum or articles; |
| ● | if, in relation to the subject matter of the eligible proceeding, the eligible party did not act honestly and in good faith with a view to the best interests of our company or the associated corporation, as the case may be; or |
| ● | in the case of an eligible proceeding other than a civil proceeding, if the eligible party did not have reasonable grounds for believing that the eligible party’s conduct in respect of which the proceeding was brought was lawful. |
If an eligible proceeding is brought against an eligible party by or on behalf of our company or by or on behalf of an associated corporation, we must not either indemnify the eligible party against eligible penalties to which the eligible party is or may be liable, or pay the expenses of the eligible party under Sections 160, 161 or 162 of the BCBCA, as the case may be, in respect of the proceeding.
Under Section 164 of the BCBCA, and despite any other provision of Part 5, Division 5 of the BCBCA and whether or not payment of expenses or indemnification has been sought, authorized or declined under Part 5, Division 5 of the BCBCA, on application of our company or an eligible party, the Supreme Court of British Columbia may do one or more of the following:
| ● | order us to indemnify an eligible party against any liability incurred by the eligible party in respect of an eligible proceeding; |
| ● | order us to pay some or all of the expenses incurred by an eligible party in respect of an eligible proceeding; |
| ● | order the enforcement of, or payment under, an agreement of indemnification entered into by us; |
| ● | order us to pay some or all of the expenses actually and reasonably incurred by any person in obtaining an order under Section 164 of the BCBCA; or |
| ● | make any other order the court considers appropriate. |
Section 165 of the BCBCA provides that we may purchase and maintain insurance for the benefit of an eligible party or the heirs and personal or other legal representatives of the eligible party against any liability that may be incurred by reason of the eligible party being or having been a director or officer of, or holding or having held a position equivalent to that of a director or officer of, our company or an associated corporation.
Under our Articles, and subject to the BCBCA, we must indemnify our directors, former directors or alternate directors and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and we must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director and alternate director is deemed to have contracted with our company on the terms of the indemnity contained in our Articles.
Under our Articles, and subject to the BCBCA, we may agree to indemnify and may indemnify any person (including an eligible party) against eligible penalties and pay expenses incurred in connection with the performance of services by that person for us. We have entered into indemnity agreements with our directors and certain of our officers.
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Pursuant to our Articles, the failure of an eligible party to comply with the BCBCA or our Articles does not, of itself, invalidate any indemnity to which he or she is entitled under our Articles.
Under our Articles, we may purchase and maintain insurance for the benefit of any person (or his or her heirs or legal personal representatives) who:
| ● | is or was our director, alternate director, officer, employee or agent; |
| ● | is or was a director, alternate director, officer, employee or agent of a corporation at a time when the corporation is or was our affiliate; |
| ● | at our request, is or was a director, alternate director, officer, employee or agent of a corporation or of a partnership, trust, joint venture or other unincorporated entity; or |
| ● | at our request, holds or held a position equivalent to that of a director, alternate director or officer of a partnership, trust, joint venture or other unincorporated entity; |
| ● | against any liability incurred by him or her as such director, alternate director, officer, employee or agent or person who holds or held such equivalent position. |
In addition, we have entered into an indemnification agreement with each of our directors, which requires us to indemnify them.
Item 15. Recent Sales of Unregistered Securities
In
the three years preceding the filing of this registration statement, we have issued the following securities that were not registered
under the Securities Act. All share numbers below give effect to the Reverse Stock Split:
| ● | On February 12, 2021, we closed a private placement with 11 accredited institutional investors for approximately $4.5 million of units. We issued the equivalent of 42,000 common shares and warrants to purchase the equivalent of 27,720 common shares. The issuance was made in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act in that such sales did not involve a public offering. |
| ● | On October 13, 2021, we issued the equivalent of 82,000 common shares to the then equity holders and convertible debt holders of BayMedica, as part consideration for our acquisition of BayMedica. The issuance was made in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act in that such sales did not involve a public offering. |
| ● | On July 2, 2021, we closed a private placement with an accredited institutional investor for approximately $12 million of common shares, pre-funded warrants and warrants. We issued the equivalent of 35,600 common shares, pre-funded warrants exercisable for the equivalent of 125,853 common shares and warrants exercisable for the equivalent of 161,453 common shares. In connection with the July 2021 private placement, we also issued to designees of the exclusive placement agent for the private placement, warrants to purchase an aggregate of the equivalent of 12,109 common shares. The foregoing issuances were made in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act in that such sales did not involve a public offering. |
| ● | On June 6, 2022, we closed a registered direct issuance and sale of the equivalent of 163,170 common shares (or pre-funded warrants in lieu thereto), as well as a concurrent private placement to issue and sell the equivalent of 69,930 common shares (or pre-funded warrants in lieu thereto), for a gross aggregate amount of $5 million. In addition, we issued to the investor in the offerings unregistered preferred investment options to purchase up to an aggregate of the equivalent of 233,100 common shares. We also amended certain existing warrants to purchase up to an aggregate of the equivalent of 179,230 common shares that were previously issued to the investor. The issuances in the concurrent private placement were made in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act in that such sales did not involve a public offering. |
| ● | On September 13, 2022, we closed a private placement, pursuant to which we issued to the investors in the private placement (i) 90,000 common shares, (ii) pre-funded warrants to purchase an aggregate of 601,245 common shares and (iii) preferred investment options to purchase up to an aggregate of 1,382,490 common shares, for a gross aggregate amount of approximately $6 million. In addition, an investor agreed to cancel preferred investment options to purchase up to an aggregate of 412,331 of our common shares which had been previously issued to such investor. In connection with the private placement, we also issued to designees of the exclusive placement agent for the private placement, preferred investment options to purchase an aggregate of 44,931 common shares. The foregoing issuances were made in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act in that such sales did not involve a public offering. |
| ● | On November 21, 2022, we closed the November Private Placement, pursuant to which we issued (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, for a gross aggregate amount of approximately $6 million. In addition, in connection with the November Private Placement, the Selling Shareholders agreed to cancel preferred investment options to purchase up to an aggregate of 1,383,490 of our common shares which had been previously issued to such Selling Shareholders. In connection with the November Private Placement, we also issued preferred investment options to purchase up to an aggregate of 118,182 of our common shares to designees of the exclusive placement agent for the November Private Placement. The foregoing issuances were made in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act in that such sales did not involve a public offering. |
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Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
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(b) Financial Statement Schedules
None
Item 17. Undertakings
| (a) | The undersigned registrant hereby undertakes: |
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
| (i) | To include any prospectus required by section 10(a)(3) of the Securities Act; |
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| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement. |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
provided, however, that paragraphs (a)(1)(i), (ii), and (iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Vancouver, British Columbia, Canada, on December 7, 2022.
| INMED PHARMACEUTICALS INC. | ||
| By: | /s/ Eric A. Adams | |
| Name: | Eric A. Adams | |
| Title: | President and Chief Executive Officer | |
Each person whose signature appears below constitutes and appoints Eric A. Adams and Sarah Li, and each of them, either of whom may act without the joinder of the other, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement, and to sign any registration statement for the same offering covered by the registration statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated and on December 7, 2022.
| Signature | Title | |
| /s/ Eric A. Adams | President, Chief Executive Officer and Director | |
| Eric A. Adams | (Principal Executive Officer) | |
| /s/ Sarah Li | Vice President, Accounting and Controller | |
| Sarah Li | (Principal Financial Officer and Principal Accounting Officer) | |
| /s/ William J. Garner | Director | |
| William J. Garner | ||
| /s/ Janet Grove | Director | |
| Janet Grove | ||
| /s/ Andrew Hull | Director | |
| Andrew Hull | ||
| /s/ Bryan Baldasare | Director | |
| Bryan Baldasare | ||
| /s/ Nicole Lemerond | Director | |
| Nicole Lemerond |
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AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, the undersigned has signed this registration statement, solely in its capacity as the duly authorized representative of InMed Pharmaceuticals Inc. in the United States, on December 7, 2022.
| Andrew Hull | |
| /s/ Andrew Hull | |
| Authorized Representative |
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Exhibit 5.1
| December 7, 2022 |  | |
| Norton Rose Fulbright Canada llp | ||
| InMed Pharmaceuticals Inc. | 222 Bay Street, Suite 3000 | |
| 815 W. Hastings Street | Toronto, Ontario M5K 1E7 | |
| Vancouver, British Columbia, Canada V6C 1B4 | ||
| F: +1 604.641.4949 | ||
| nortonrosefulbright.com |
Re: Registration Statement InMed Pharmaceuticals Inc. on Form S-1
Dear Sirs/Mesdames:
We have acted as counsel to InMed Pharmaceuticals Inc. (the Company), a corporation incorporated under the laws of British Columbia, in connection with its filing of a registration statement on Form S-1 (the Registration Statement) filed by the Company under the Securities Act of 1933, as amended (the Securities Act), relating to the offer and resale of up to an aggregate of 5,090,918 common shares of the Company, consisting of: (i) 150,000 common shares (the Common Shares), (ii) 1,668,185 common shares (the Pre-Funded Warrant Shares) issuable upon the exercise of outstanding unregistered pre-funded warrants previously issued by the Company in November 2022, with such pre-funded warrants exercisable at an exercise price of US$0.0001 per share at any time (the Pre-Funded Warrants), and (iii) 3,272,733 common shares (the Investment Option Shares and, together with the Pre-Funded Warrant Shares, the Converted Shares), issuable upon the exercise of preferred investment options previously issued by the Company in November 2022, with such investment options exercisable at an exercise price of US$3.044 per share until November 21, 2029 (the Investment Options). We have been requested by the Company to render this opinion in connection with the filing of the Registration Statement.
As counsel, we have made such investigations and examined the originals, or duplicate, certified, conformed, telecopied or photostatic copies of such corporate records, agreements, documents and other instruments and have made such other investigations as we have considered necessary or relevant for the purposes of this opinion, including:
| (a) | the Registration Statement; |
| (b) | the articles, as amended, and the notice of articles of the Company; and |
| (c) | a Certificate of Good Standing dated December 7, 2022 issued by the British Columbia Registrar of Companies. |
With respect to the accuracy of factual matters material to this opinion, we have relied upon certificates or comparable documents and representations of public officials and of officers of the Company and have not performed any independent check or verification of such factual matters.
In giving this opinion, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to authentic original documents of all documents submitted to us as duplicates, certified, conformed, telecopied or photostatic copies and the authenticity of the originals of such latter documents, and that all facts set forth in the certificates supplied by officers of the Company are complete, true and accurate as of the date hereof. We have also assumed that the certificate of compliance referred to above will continue to be accurate as at the date of issuance of any Converted Shares offered or sold under the Registration Statement, and that prior to the issuance and delivery of the Converted Shares, the Company will receive, in cash, the full exercise price in respect of the Pre-Funded Warrants and Investment Options.
The opinion set forth below is limited to the laws of the Province of British Columbia and the federal laws of Canada applicable therein, in each case in effect on the date hereof. Our opinion is rendered as of the date hereof, and we assume no obligation to advise you of changes in law or fact (or the effect thereof on the opinions expressed herein) that hereafter may come to our attention.
The opinion set forth below is subject to the following exceptions, limitations and qualifications: (i) the effect of bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance, fraudulent transfer and other similar laws relating to or affecting the rights of creditors; (ii) the effect of general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief and other equitable remedies), regardless of whether considered in a proceeding at law or in equity, (iii) the effect of public policy considerations that may limit the rights of the parties to obtain further remedies, (iv) we express no opinion with respect to the enforceability of provisions relating to choice of law, choice of venue, jurisdiction or waivers of jury trial, and (v) we express no opinion with respect to the enforceability of any waiver of any usury defense.
Based on the foregoing, and subject to the assumptions, limitations and qualifications set forth herein, including the assumption that the Registration Statement and any required post-effective amendment(s) thereto required by applicable laws have become effective under the Securities Act, we are of the opinion that (i) the Common Shares have been authorized and validly issued and are fully paid and non-assessable and (ii) the Converted Shares have been authorized, reserved and allotted for issuance and, upon issuance, delivery and payment therefor in accordance with the terms of the Pre-Funded Warrants and the Investment Options, the Converted Shares will be validly issued as fully-paid and non-assessable shares in the capital of the Company.
We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement and to the use of our name therein. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the Rules and Regulations of the Commission promulgated thereunder.
Yours truly,
/s/ Norton Rose Fulbright Canada LLP
Norton Rose Fulbright Canada LLP
Norton Rose Fulbright Canada LLP is a limited liability partnership established in Canada.
Norton Rose Fulbright Canada LLP, Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright South Africa Inc and Norton Rose Fulbright US LLP are separate legal entities and all of them are members of Norton Rose Fulbright Verein, a Swiss verein. Norton Rose Fulbright Verein helps coordinate the activities of the members but does not itself provide legal services to clients. Details of each entity, with certain regulatory information, are at nortonrosefulbright.com.
Exhibit 10.15
EMPLOYMENT AGREEMENT
THIS AGREEMENT made this 1st day of March, 2021 (the “Effective Date”)
BETWEEN:
INMED PHARMACEUTICALS INC., a company incorporated under the laws of British Columbia with offices at Suite 310, 815 West Hastings St., Vancouver, B.C., V6C 1B4 (the “Company”)
AND:
SARAH LI (the “Employee”), of 6957 Cunningham Court, Burnaby, V5E 0B1 BC
(each a “Party” and together, the “Parties”)
WHEREAS:
| A. | The Company is a clinical stage pharmaceutical company that specializes in developing therapies through the research and development of novel, cannabinoid-based and other pharmaceutical therapies to treat disease combined with innovative drug delivery systems; |
| B. | The Employee has the expertise, qualifications and required certifications to perform the services contemplated by this Agreement; |
| C. | The Parties entered into an employment agreement with an effective date of December 11, 2019 (the “Original Employment Agreement”); and |
| D. | The Company and the Employee have agreed to set out in writing the terms and conditions of the Employee’s continued employment. |
NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, including increased compensation, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
| 1 | EMPLOYMENT |
| (a) | Terms of Employment. The Employee will be continue to be employed by, and will continue to serve, the Company on the terms and conditions set out herein. |
| (b) | Position and Services. The Employee will hold the position of Controller and will have powers and duties consistent with such position as may from time to time be prescribed by the Chief Financial Officer of the Company, as outlined in Exhibit A (the “Services”). The Employee will report directly to the Chief Financial Officer, or designee, and will comply with all lawful instructions given by the Chief Financial Officer, or designee. |
| (c) | Term. The terms and conditions of this Agreement will have effect as and from the Effective Date and the Employee’s employment will continue until terminated as provided for in this Agreement (the “Term”). |
| (d) | Policies. The Employee’s employment with the Company is subject to and governed by the Company’s policies as established and amended by the Company from time to time in its sole discretion. |
| (e) | Performance of Duties. The Employee will perform the Services in a competent and efficient manner and on an exclusive, full-time basis. The Employee may manage their personal investments activities as long as such activities do not interfere with the Employee’s performance of their duties to the Company. The Employee will at all times act in good faith to the Company. |
The Employee may participate in business associations, charitable organizations or other similar organizations, subject to the reasonable objection of the Company and provided that it does not interfere with the proper discharge of the Employee’s duties to the Company. However, while employed by the Company, the Employee must not carry out any other work or be involved in any other business for the Employee or any other person, firm or company (whether for compensation or not,) without first obtaining written permission from the Company. The Employee represents that they are not currently involved with any other business for which they must seek such permission.
| (f) | Fiduciary. The Employee acknowledges that the Employee will be in a fiduciary relationship with the Company and will continue to owe fiduciary obligations to the Company. The provisions of this Agreement including the Exhibits are additional to and do not amend, replace or otherwise reduce the Employee’s fiduciary obligations at law or equity. |
| (g) | Compliance with the Law. The Employee will that their actions are at all times in compliance with applicable laws, including without limitation the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), the Corruption of Foreign Public Officials Act (Canada), and the Foreign Corrupt Practices Act (U.S.). |
| 2 | REMUNERATION AND BENEFITS |
| (a) | Base Salary. |
| (i) | The Company will pay the Employee an annual salary of CA$138,500, for full-time performance of the Services (the “Base Salary”). The Base Salary is payable in a manner that is consistent with the Company’s usual payroll practices for Employees as amended from time to time. |
| (ii) | The Employee’s Base Salary will be reviewed annually by the Management Team, Board and the compensation committee of the Company in accordance with the Company’s annual performance and compensation review process, including consideration of the Company’s market capitalization and financial stability. Any increase in Base Salary is at the sole discretion of the Company. An increase in the Base Salary in any year or any number of years does not entitle the Employee to any increase in the Base Salary in any subsequent year. |
| (b) | Bonus. The Employee is eligible to be considered for an annual discretionary bonus which will be subject to the approval of the Board and the compensation committee of the Company, in their sole discretion, on an annual basis in accordance with the Company’s annual performance and compensation review process, including consideration of the Company’s market capitalization and financial stability. Payment of a bonus in any one year or any number of years will not entitle the Employee to any payment of a bonus in any subsequent year. The target annual discretionary bonus for the Employee is equal to 25% of Base Salary (the “Target Bonus”). |
| (c) | Stock Options. The Company may from time to time in its sole discretion grant to the Employee stock options in the capital of the Company (the “Options”) pursuant to the Company’s Incentive Stock Option Plan (the “SOP”) on the terms and conditions for such participation as established and changed from time to time by the Company in its sole discretion. For clarity, any Options that are granted will be granted at the market price in accordance with and subject to the options policies of the applicable exchange and will be subject to the Company’s Insider Trading Guidelines including the blackout provisions therein. The terms and conditions relating to the Options will be subject to the Option Agreement that is entered into as a condition of the grant of the Options. If there is any conflict between the terms of this Agreement and the SOP, the terms of the SOP will govern. If there is any conflict between the terms of this Agreement and the Option Agreement, the terms of this Agreement will govern to the extent of the conflict. |
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The Employee will retain any outstanding stock options that were granted to the Employee prior to the Effective Date on the same terms as set out in the Option Agreement and the SOP. The Employee’s outstanding stock options as of the Effective Date are as follows:
| Date of Grant | Number of Options | Expiry Date | |||||
| 12-Jan-20 | 3,030 | 11-Jan-25 | |||||
| 12-Jan-20 | 3,030 | 11-Jan-25 | |||||
| 16-Dec-20 | 2,000 | 15-Dec-25 | |||||
| (d) | Expenses. The Company will reimburse the Employee for all reasonable expenses actually and properly incurred by the Employee in performing services under this Agreement, in accordance with the policies and procedures then in effect and established by the Company for its senior Employees as amended by the Company from time to time in its sole discretion. |
| (e) | Other Benefits. The Company will facilitate the Employee’s continued enrolment in the Company’s insured benefits plans as amended from time to time by the Company in its sole discretion or by the Company’s insurance carrier. Eligibility to participate in the plans and to receive benefits under the plans, and the payment of benefits will be subject to the terms and requirements of the applicable insurance carrier in accordance with the formal benefits plan documents and policies. The Company’s financial liability is limited to paying its portion of the premium cost of the benefits. The Company will not be responsible for the payment of benefits in any circumstance. The Company reserves the right, in its sole discretion, to amend, change or terminate any of the insurance benefit plans or providers in whole or in part at any time. |
| (f) | Vacation. The Employee is entitled to paid holidays and vacation days each year, in an amount determined in accordance with and subject to the Company’s applicable policies in effect, and as may be amended from time to time. The Employee will be entitled to 25 days of vacation per calendar year, which will be pro-rated for partial years of service, including for any period in which the Employee is not a full-time employee. Vacation days will be scheduled at times that are mutually acceptable to the Employee and the Company. Carry-over of vacation days will be according to Company policy, and any accrued but unused vacation days will be paid out upon termination or otherwise as per Company policies, as amended by the Company from time to time in its sole discretion. |
| 3 | COVENANTS |
| (a) | Competition. During the Term, the Employee will not compete with the Company in any manner whatsoever. |
| (b) | Confidentiality and Intellectual Property Agreement. The Employee and the Company will enter into a Confidentiality and Assignment of Inventions Agreement in the form attached hereto as Exhibit B. |
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| (c) | Restrictive Covenant Agreement. The Employee will execute and abide by the Restrictive Covenant Agreement attached hereto as Exhibit C. |
| (d) | Acknowledgement. The Employee acknowledges that the consideration provided by the Company under this Agreement, including without limitation an increase in the Base Salary, is in part in exchange for the Employee’s agreement to execute and abide by the Exhibits B and C to this Agreement, and that the Employee has received sufficient consideration for the Employee’s agreement to execute and abide by those Exhibits. |
| 4 | TERMINATION |
| (a) | Definitions. In this Agreement, |
| (i) | “Date of Termination” means: |
| (A) | if the Employee’s employment is terminated by their death, the date of death; |
| (B) | if the Employee’s employment is terminated by the Company for any reason, on the effective date of the Notice of Termination that is given to the Employee; or |
| (C) | if the Employee terminates their employment under section 6, on the effective date of resignation specified by the Employee in the Notice of Termination subject to the Company’s rights pursuant to section 6. |
| (ii) | “Disability” means the inability of the Employee to substantially perform the Services on a full-time basis for a continuous or cumulative period of six months in any 18-month period where such inability is a result of physical or mental illness or injury and where it would cause undue hardship to the Company to accommodate. |
| (iii) | “Just Cause” means: |
| (A) | the Employee is convicted of a crime involving dishonesty, breach of trust, or physical harm to any person (excluding driving while affected by drugs or alcohol) or any violation of provincial or federal securities laws, |
| (B) | the Employee willfully engages in conduct that is in bad faith and/or materially injurious to the Company, monetarily, reputationally, or otherwise, including but not limited to, misappropriation of trade secrets, fraud, embezzlement or moral turpitude, |
| (C) | the Employee commits a material breach of this Agreement including the Exhibits, |
| (D) | the Employee willfully and on a continuing basis refuses to implement or follow a material lawful policy or reasonable directive of the Company, or |
| (E) | the Employee willfully and on a continuing basis fails to perform their duties hereunder diligently and professionally; or |
| (F) | the Employee engages in any other conduct that constitutes just cause to terminate the employment relationship at common law; and |
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| (iv) | “Notice of Termination” means a written notice by the Company or the Employee that provides the other party with notice of termination of the employment under this Agreement and indicates the specific termination provision in this Agreement upon which the termination is based. |
| (b) | Termination. The Employee’s employment with the Company may be terminated as follows: |
| (i) | by the Company for Just Cause; |
| (ii) | by the Company in its sole discretion without Just Cause subject to providing the payments and entitlements set out in section 5 of this Agreement; |
| (iii) | by the Employee as provided for in section 6 of this Agreement; |
| (iv) | by the Company following receipt of a Notice of Termination by the Employee as contemplated in section 6 of this Agreement; |
| (v) | by the Employee’s death, in which case a Notice of Termination will be deemed to have been given by the Employee to the Company as of the Date of Termination; or |
| (vi) | by the Company as a result of Disability, but nothing in this section 4(b)(vi) will reduce the Employee’s rights, if any, under the Company’s insurance benefits plans accruing prior to termination or under applicable law, |
and the Company shall pay or provide to the Employee (or the authorized representative or estate of the Employee if applicable) any earned but unpaid Base Salary, unpaid expense reimbursements validly incurred by the Employee, accrued but unused vacation subject to Company policy, any vested benefits the Employee may have under any employee benefit plan of the Company, and any earned but unpaid annual bonus for the prior fiscal year, that is due and owing for Services provided up to and including the Date of Termination (collectively the “Accrued Benefits”). If the termination is initiated by the Company, the Company will also provide the notice of termination or wages in lieu of notice owing pursuant to the minimum requirements of the B.C. Employment Standards Act (the “ESA Entitlement”).
| (c) | Return of Materials. The Employee will return to the Company all Company documents, files, manuals, books, software, equipment, keys, identification or credit cards, and all other property belonging to Company, including electronic devices and any necessary passwords and encryption codes immediately upon the termination of the Employee’s employment with the Company for any reason. |
| (d) | Release. In order to receive the entitlements set out in this Agreement that are in excess of the ESA Entitlement, the Employee, or the estate of the Employee as applicable, will be required, within 14 days of the Date of Termination, to sign and return a Release in the form attached as Exhibit D to this Agreement (the “Release”) failing which the Employee will only be entitled to the ESA Entitlement, if any. For clarity, if the Employee does not sign and return the Release to the Company, then the Employee will still be bound by the provisions of this Agreement, including each of the obligations set out in the Exhibit B and C. |
| (e) | Full Satisfaction. The amounts payable to the Employee pursuant to the express terms of this Agreement, if any, constitute full and final satisfaction of the Employee’s rights and entitlements in connection with the termination of the Employee’s employment, including without limitation pursuant to the B.C. Employment Standards Act (“ESA”) and the common law, and the Company shall have no further obligation or liability of any kind for any claim, action, complaint, or demand whatsoever, whether at law or equity, under contract, or under any legislation from time to time applicable and in force or otherwise, for any remedy, damages, or loss sustained or sought by the Employee arising out of the employment of the Employee by the Company or the termination of that Employment. |
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| 5 | TERMINATION WITHOUT JUST CAUSE |
If the Employee’s employment is terminated by the Company without Just Cause pursuant to section 4(b)(ii), then in addition to the ESA Entitlement and the payment of any Accrued Benefits, and subject to the Employee first providing the Company with an executed Release pursuant to section 4(e), the Company shall pay the Employee an amount (the “Severance Amount”) calculated as follows:
| (a) | if terminated within two (2) years of the effective date of the Original Employment Agreement, six (6) months’ Base Salary less an amount equal to the ESA Entitlement provided by the Company to the Employee; less withholdings; or |
| (b) | if terminated any time after the two (2) year anniversary of the effective date of the Original Employment Agreement, six (6) month’s Base Salary plus one month for each additional full year of employment in excess of two years to a maximum of 12 months month’s Base Salary, less an amount equal to the ESA Entitlement provided by the Company to the Employee, less withholdings; and |
| (c) | in addition to the amount payable under section 5(a) or 5(b), a bonus payment equal to the average of the actual annual bonus payments, if any, made to the Employee from the previous 3 calendar years preceding the Date of Termination, pro-rated for the then current calendar year up to and including the Date of Termination. |
The Company shall pay the Severance Amount within 5 business days after the date that the Company receives the signed Release as per section 4(e) of this Agreement, provided that the Company, in its sole discretion, may pay the Severance Amount by way of one or more lump sum payments, by way of salary continuance or by a combination of both.
| 6 | RESIGNATION WITHOUT GOOD REASON |
The Employee may terminate their employment by providing to the Company Notice of Termination of their employment at least 90 days prior to the effective date of resignation. During such notice period, the Employee shall continue to diligently perform all of the Employee’s duties. Upon receipt of a Notice of Termination from the Employee pursuant to this section 6, the Company may, at its option:
| (a) | direct that the Employee cease providing part or all of the Services and such direction will not constitute an express or constructive termination of the employment of the Employee by the Company, provided that the Company will remain bound to pay the Base Salary for the balance of the notice period provided by the Employee; or |
| (b) | terminate the employment of the Employee at any time within the notice period, including where the Company first elects to proceed with the option under section 6 (a) above, in which case, unless the termination is for Just Cause, the Company will pay the Employee only the lesser of either (i) an amount equal to the Base Salary from the date the Employee provided the Notice of Termination until the earlier of the date of resignation or retirement selected by the Employee and 90 days from the date the Employee provided the Notice of Termination, and (ii) the ESA Entitlement. |
For clarity, if the Company elects to terminate the employment of the Employee after receiving Notice of Termination from the Employee, the Company will not owe the Employee the Severance Amount and all benefits coverage will cease as of the Date of Termination set out in the Employer’s Notice of Termination.
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| 7 | Stock Option Plan (SOP) Entitlements |
| (a) | On a termination of the employment of the Employee for any reason and whether initiated by the Company or the Employee, the rights of the Employee with respect to any Option will be determined in accordance with the SOP and the applicable Option Agreement. |
| (b) | Acknowledgement: The Employee acknowledges and agrees that the provisions of this Agreement and the SOP may significantly limit and restrict the Employee’s common law rights and entitlements to remuneration upon the termination of the Employee’s employment for any reason, whether the termination is voluntary or involuntary, and whether the termination was initiated by the Employee, by the Company, or otherwise, and that the Employee has had a reasonable opportunity to review these provisions and seek legal advice. |
Initial Here: _________
| 8 | GENERAL |
| (a) | Withholdings and Currency. All payments made by the Company to the Employee under this Agreement will be in Canadian dollars and subject to tax or other amounts required to be withheld by the Company under applicable law. Nothing in this Agreement is to be construed to obligate the Company to design or implement any compensation arrangement in a way that minimizes tax consequences for the Employee. |
| (b) | Remedies. The Employee acknowledges that damages cannot be an adequate remedy to compensate the Company for any actual or anticipatory breach by the Employee of section 1(e) of this Agreement or Exhibits B and C. In the event of a breach or anticipatory breach by the Employee of the provisions of section 1(e) of this Agreement or the Exhibits B and C, the Company will be entitled to interim, interlocutory and permanent injunctions restraining the Employee from such breach. Nothing contained herein will be construed as prohibiting the Company from pursuing any other remedies available at law or equity for such breach or anticipatory breach of this Agreement including the Exhibits nor limiting the amount of damages recoverable in the event of a breach or anticipatory breach by the Employee of the provisions of section 1(e) of this Agreement or the Exhibits B and C. Without limiting the generality of the foregoing, the Employee acknowledges that, in the event of a breach or threatened breach by the Employee of any of the provisions of section 1(e) of this Agreement or the Exhibits B and C, the damages of the Company may exceed the amount paid to the Employee pursuant to this Agreement. If the Employee breaches any provision of this Agreement, then despite any term or condition to the contrary and without limitation to any remedy the Company may be entitled to, any entitlement of the Employee to remuneration that has not yet been paid or provided is immediately terminated except and only to the extent that the compensation is minimally owing under the ESA or any other applicable legislation. |
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| (c) | Assignment and Benefit. The Employee will not assign or transfer this Agreement or any rights or obligations hereunder. The Company may assign this Agreement to any successor to the Company and in the event of such an assignment the provisions hereof will inure to the benefit of, and be binding upon, each successor of the Company, whether the successor arises by merger, consolidation or transfer of all or substantially all of its assets. This Agreement shall inure to the benefit of and be enforceable by the Employee’s successors and legal representatives. |
| (d) | Non-Waiver. Failure on the part of either party to complain of any act or failure to act of the other of them or to declare the other party in default of this Agreement, irrespective of how long such failure continues, will not constitute a waiver by such party of their rights hereunder or of the right to then or subsequently declare a default. |
| (e) | Severability. If any provision in this Agreement including the Exhibits is found to be invalid or unenforceable, then to the greatest extent permitted by law the scope of any unenforceable provision will be deemed modified and diminished by the Parties to the minimum extent necessary to render such provision valid and enforceable, and in any event the invalidity or unenforceability of any such provision will not affect the validity or enforceability of any other provision of this Agreement including the Exhibits. |
| (f) | Entire Agreement. This Agreement, including the Exhibits and any Option Agreements, constitutes the entire agreement between the parties with respect to the employment of the Employee and supersedes any and all agreements, understandings, warranties or representations of any kind, written or oral, express or implied, including any relating to the nature of the position or its duration in including the Original Employment Agreement, and each of the parties releases and forever discharges the other of and from all manner of actions, causes of action, claim or demands whatsoever under or in respect of any agreement. |
| (g) | Survival. The provisions of sections 1(f) and 3 to 9 inclusive this Agreement and the Exhibits survive the termination of this Agreement and/or the termination of the Employee’s employment to the extent necessary to effectuate the intent of the Parties as expressed in this Agreement. |
| (h) | Modification of Agreement. Any modification of this Agreement must be in writing and signed by both the Company and the Employee or it will have no effect and will be void. |
| (i) | Headings and Sub-Headings. Descriptive headings and sub-headings are for convenience only and will not control or affect the meaning or construction of any provision of this Agreement. |
| (j) | Disputes. All disputes arising out of or in connection with this Agreement and the employment relationship between the parties, including the Exhibits, are to be referred to and finally resolved by a single arbitrator pursuant to the Domestic Commercial Rules of Procedure of the British Columbia International Commercial Arbitration Centre. The place of arbitration will be Vancouver, British Columbia. |
Either Party may apply to the arbitrator for injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Before an arbitrator is appointed or makes a final determination on the merits of the controversy, either Party also may, without waiving any remedy under this Agreement, seek from any court of competent jurisdiction in British Columbia sitting in Vancouver any interim or provisional relief that is necessary to protect the rights or property of that Party.
Any decision of the Arbitrator shall be final and binding on the Parties and their respective successors and assigns and there shall be no right to appeal such decision, whether on a question of law, a question of fact, or a mixed question of law or fact.
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Each Party shall bear its own costs of any arbitration proceedings commenced pursuant to this Agreement, including legal and travel costs, and the Parties shall equally share the fees of the Arbitrator and the facility fees.
The Arbitration procedures, hearings, documents, and award shall remain strictly confidential between the Parties.
Acknowledgement: The Employee acknowledges and agrees that the Employee has had a reasonable opportunity to review this arbitration provision, inquire about the nature and extent of the costs of arbitration and seek legal advice.
Initial Here: _________
| (k) | Governing Law and Language. This Agreement will be governed by and construed according to the laws of the Province of British Columbia and the laws of Canada applicable therein. |
| (l) | Notices. Any notices, requests, demands, and other communications provided for by this Agreement are sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested, to the Employee at the last address the Employee has filed in writing with the Company or, in the case of the Company, at its main offices, attention to the Corporate Secretary. |
| (m) | Collection and Use of Personal Information. The Employee acknowledges that the Company will collect, use and disclose health and other personal information for employment and business related purposes. The Employee consents to the Company collecting, using and disclosing health and other personal information of the Employee for employment and business related purposes in accordance with the privacy policy of the Company. |
| (n) | Minimum Requirements. Nothing in the Agreement is intended to contract out of any minimal substantive or procedural entitlements or rights that the Employee may have under the ESA, B.C. Human Rights Code or any other applicable legislation. If any provision in the Agreement provides the Employee with an entitlement that does not meet what the Employee is minimally entitled to under the ESA, Human Rights Code or any other applicable legislation, then the provision is deemed modified so that the Employee receives the minimum entitlement required under the ESA, Human Rights Code or any other applicable legislation. |
| (o) | Independent Legal Advice. The Employee agrees that the Employee has obtained or has had an opportunity to obtain independent legal advice in connection with this Agreement, and further acknowledges that the Employee has read, understands, and agrees to be bound by all of the terms and conditions contained herein. The Employee further agrees that the consideration described aforesaid is accepted voluntarily for the purpose of employment with the Company under the terms and conditions described herein. |
| (p) | Use of Discretion: Where this Agreement or Exhibits grant the Company a discretionary power, the Company will be entitled to exercise that power in its sole and absolute discretion for the best interests of the business of Company except that any discretion exercisable with respect to the Restrictive Covenant Agreement must be exercised reasonably. |
| (q) | Counterparts. This Agreement may be executed in any number of counterparts, and by each party on separate counterparts, each of which counterparts, when so executed and delivered is to be taken to be an original; but those counterparts together constitute one and the same document. PDF, facsimile, scanned, and electronic signatures have the same legal effect as original ink signatures. |
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IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement, and the Employee has initialed where indicated above, as of the day and year first written above.
| INMED PHARMACEUTICALS INC | SARAH LI | |
| Authorized Signatory |
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Exhibit A – Services
Controller Duties and Responsibilities.
ESSENTIAL DUTIES AND RESPONSIBILITIES
The Employee will perform the services normally or usually associated with the position and such other or different duties as may be from time to time delegated to the Employee by the Company in its sole discretion, including without limitation:
| ● | Manage and monitor all accounts, ledgers, and reporting systems ensuring compliance with appropriate GAAP standards and regulatory requirements as well as the requirements of private contributions, loans, and government contracts |
| ● | Guides financial decisions by establishing, monitoring, and enforcing policies and procedures. |
| ● | Taking the lead on preparation of annual budget |
| ● | Preparation of workpapers supporting the annual tax returns |
| ● | Coordinate the preparation of annual tax returns with outside CPA firm |
| ● | Preparation of workpapers supporting the monthly close process and month end balances |
| ● | Review monthly accounting close process including analytical review of the monthly operating results to ensure accurate accounting records are maintained |
| ● | Preparation of quarterly financial statements and related footnotes in accordance with either, or both, US GAAP and IFRS |
| ● | Manage the relationship with outside auditors |
| ● | Facilitate quarterly reviews and annual audit by outside CPA firm |
| ● | Preparation of monthly reforecast incorporating historical results and future assumptions |
| ● | Preparation of semi-monthly payroll and supervision of all accounts payable |
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| ● | Implement, document and maintain adequate and effective internal controls |
| ● | Implement, document and maintain adequate and effective processes to improve the close and reporting cycles to ensure timely and accurate reporting |
| ● | Assist with securities commissions and stock exchanges compliance matters |
| ● | Prepare quarterly variance analysis of actual versus budgeted results |
| ● | Assist the CFO with overall risk management activities |
| ● | Manage insurance coverages including relationship with external broker |
| ● | Manage external virtual data-room |
| ● | Assist with the preparation of materials for quarterly Board meetings and Board committee meetings |
| ● | Manage administration of the stock option plan including stock based compensation |
| ● | Assist the CFO with corporate governance matters including various Corporate Secretary activities, AGM circular and AIF |
| ● | Manage employee benefits plan |
| ● | Any other responsibilities that may be assigned from time to time |
| ● | Other projects as may be assigned from time-to-time by the Chief Financial Officer and other Executives of the Company. |
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Exhibit B – Confidentiality and Assignment of Inventions Agreement
Dated: March 1, 2021
| WHEREAS: |
| A. | In accordance with the terms of the Employment Agreement between the Employee and the Company dated March 1, 2021 (the “EA”), the Employee has agreed to execute this Confidentiality and Assignment of Inventions Agreement on the terms set out herein. |
NOW THEREFORE for good and valuable consideration, including the consideration contemplated by the EA, the receipt and sufficiency of which is acknowledged by the Employee, the Employee and the Company agree as follows:
| 1 | INTERPRETATION |
The capitalized terms have the meanings ascribed to them in the EA, and the following terms have the following meanings:
| (a) | “Affiliate” means, in respect of the Company, a company or other entity which directly or indirectly controls, is controlled by, or is under common control with, the Company. For the purposes of this definition, “control” means direct or indirect beneficial ownership of a greater than 50% interest in the income of such company or entity or such other relationship as, in fact, constitutes actual control. |
| (b) | “Business” or “Business of the Company” means: |
| (i) | researching, developing, commercializing, producing and marketing novel, cannabinoid-based and other pharmaceutical therapies to treat disease combined with innovative drug delivery systems; or |
| (ii) | any other area in which the Company has an active research and development program on the date the Employee’s employment with the Company terminates and in connection with which the Employee directly provided Services or had direct supervisory responsibilities. |
| (c) | “Confidential Information” shall mean all information, knowledge, or data, whether in written, oral, electronic or other form, relating to the Business of the Company, whether or not conceived, originated, discovered or developed in whole or in part by the Employee, that is not generally known to the public or to other persons who are not bound by obligations of confidentiality and: |
| (i) | from which the Company or its Affiliates derive economic value, actual or potential, from the information not being generally known; or |
| (ii) | in respect of which the Company or its Affiliates otherwise have a legitimate interest in maintaining secrecy; |
and which, without limiting the generality of the foregoing, shall include:
| (iii) | all proprietary information licensed to, acquired, used or developed by the Company and its Affiliates in its research and development activities (including but not restricted to the research and development of cannabinoid-based and other pharmaceutical therapeutics and delivery technology), other scientific strategies and concepts, designs, know-how, information, material, formulas, processes, research data and proprietary rights in the nature of copyrights, patents, trademarks, licenses and industrial designs; |
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| (iv) | all information relating to the Business of the Company, and to all other aspects of the structure, personnel and operations of the Company and its Affiliates, including financial, clinical, regulatory, marketing, advertising and commercial information and strategies, customer lists, compilations, agreements and contractual records and correspondence; programs, devices, concepts, inventions, designs, methods, processes, data, know-how, unique combinations of separate items that is not generally known and items provided or disclosed to the Company or its Affiliates by third parties subject to restrictions on use or disclosure; |
| (v) | all know-how relating to the Business of the Company, including all biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, clinical, safety, manufacturing and quality control data and information, and all applications, registrations, licenses, authorizations, approvals and correspondence submitted to regulatory authorities; |
| (vi) | all information relating to the businesses of competitors of the Company or its Affiliates, including information relating to competitors’ research and development, intellectual property, operations, financial, clinical, regulatory, marketing, advertising and commercial strategies, that is not generally known; |
| (vii) | all information provided to the Company or its Affiliates by their agents, consultants, lawyers, contractors, licensors or licensees and relating to the Business of the Company; and |
| (viii) | all information relating to the Employee’s compensation and benefits, including salary, vacation, stock options, perquisites, severance notice, rights on termination and all other compensation and benefits, except that the Employee shall be entitled to disclose such information to the Employee’s bankers, advisors, agents, consultants and other third parties who have a duty of confidence to the Employee and who have a need to know such information in order to provide advice, products or services to the Employee. |
All Work Product shall be deemed to be the Company’s Confidential Information.
Notwithstanding the foregoing, “Confidential Information” does not include information which the Employee can prove is information that was in the public domain at the date of disclosure to the Employee, or thereafter entered the public domain through no fault of the Employee (but only after it has entered the public domain) provided that any combination of information that is Confidential Information will not be included within the exception merely because parts of the information were within the public domain unless the whole of the combination itself was in the public domain.
| (d) | “Intellectual Property” is used in its broadest sense and means and includes any statutory, common law, equitable, contractual or proprietary rights or interests, recognized currently or in future, in and to any Inventions, including, without limitation, rights and interests in and to the following: |
| (i) | knowledge, know-how and its embodiments, including trade secret information; |
| (ii) | patents in inventions, and all applications therefor; |
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| (iii) | copyrights in artistic, literary, dramatic, musical, and neighbouring works, copyrightable works of authorship including technical descriptions for products, user guides, illustrations, advertising materials, computer programs, source code and object code, and all applications therefor; |
| (iv) | trademarks, service marks, tradenames, business names and domain names and all applications therefor; |
| (v) | industrial designs and all other industrial or intellectual property and all applications therefor; and |
| (vi) | all goodwill connected with the foregoing. |
| (e) | “Inventions” shall mean any and all inventions, discoveries, developments, enhancements, improvements, concepts, formulas, designs, processes, ideas, writings and other works, whether or not reduced to practice, and whether or not protectable under patent, copyright, trade secret or similar laws. |
| (f) | “Work Product” shall mean any and all Inventions and possible Inventions relating to the Business of the Company and which the Employee may make or conceive, alone or jointly with others, during their involvement in any capacity with the Company, whether during or outside their regular working hours, except those Inventions made or conceived by the Employee entirely on their own time that do not relate to the Business of the Company and do not derive from any equipment, supplies, facilities, Confidential Information or other information, gained, directly or indirectly, from or through their involvement in any capacity with the Company. |
| 2 | CONFIDENTIALITY |
| (a) | Property of the Company. The Company shall exclusively own all right, title and interest in and to the Confidential Information, whether or not created or developed by the Employee. |
| (b) | Prior Business Confidential Information. The Employee represents and warrants to the Company that the Employee has not brought or used, and the Employee covenants and agrees that the Employee will not use or bring to the Company any confidential information of any kind whatsoever of any prior party (the “Prior Business”) with whom the Employee was previously involved, whether such involvement was as an employee, director or officer of that Prior Business, an investor in that Prior Business, a partner in that Prior Business, a consultant to that Prior Business or other relationship to that Prior Business (the “Prior Involvement”). The Company and the Employee acknowledge and agree that the Company is not employing the Employee to obtain confidential information relating to any Prior Involvement and the Employee acknowledges that the Company has advised the Employee to comply with any and all legal obligations the Employee may have to such Prior Business. The Employee covenants and agrees to indemnify and hold the Company harmless from any and all loss, claims, damages, expenses and costs (including legal costs on a solicitor-client basis) of any kind whatsoever that the Company may suffer related to of any breach by the Employee of their obligations to such Prior Business in that regard. |
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| (c) | Basic Obligation of Confidentiality. The Employee hereby acknowledges and agrees that the Company has disclosed and will continue to disclose to the Employee, and that the Employee has had and will continue to have access to Confidential Information. The Employee will receive and hold all Confidential Information on the terms and conditions set out in this Exhibit B. Except as otherwise expressly set out in this Exhibit B, the Employee will keep strictly confidential all Confidential Information and all other information belonging to the Company that the Employee acquires, observes or is informed of, directly or indirectly, in connection with the Employee’s involvement, in any capacity, with the Company both during and after the employment in any capacity with the Company. |
| (d) | Non-Disclosure. Except with the prior written consent of the Company or as may be expressly required in the course of performing the Services, the Employee will not at any time, either during or after their employment in any capacity with the Company; |
| (i) | use or copy any Confidential Information or recollections thereof for any purpose other than the performance of the Services for the benefit of the Company and its Affiliates; |
| (ii) | publish or disclose any Confidential Information or recollections thereof to any person other than to employees of the Company and its Affiliates who have a need to know such Confidential Information in the performance of their duties for the Company or its Affiliates; |
| (iii) | permit or cause any Confidential Information to be used, copied, published, disclosed, translated or adapted except as otherwise expressly permitted by this Agreement; or |
| (iv) | permit or cause any Confidential Information to be stored off the premises of the Company, including permitting or causing such Confidential Information to be stored in electronic format on personal computers, except in accordance with written procedures of the Company, as amended from time to time in writing. |
| (e) | Taking Precautions. The Employee will take all reasonable precautions necessary or prudent to prevent material in their possession or control that contains or refers to Confidential Information from being discovered, used or copied by third parties. |
| (f) | Control of Confidential Information and Return of Information. All physical materials produced or prepared by the Employee containing Confidential Information, including, without limitation, records, devices, computer files, data, notes, reports, proposals, lists, correspondence, specifications, drawings, plans, materials, accounts, reports, financial statements, estimates and all other materials prepared in the course of their responsibilities to or for the benefit of the Company or its Affiliates, together with all copies thereof (in whatever medium recorded), shall belong exclusively to the Company, and the Employee will promptly turn over to the Company’s possession every original and copy of any and all such items in their possession or control upon request by the Company. If the material is such that it cannot reasonably be delivered, upon request from the Company, the Employee will provide reasonable evidence that such materials have been destroyed, purged or erased. |
| (g) | Purpose of Use. The Employee agrees that they will use Confidential Information only for purposes authorized or directed by the Company. |
| (h) | Exemptions. The obligations of confidentiality set out in this Section 2 will not apply to |
| (i) | information required by operation of law, court order or government agency to be disclosed, provided that: |
| (ii) | in the event that the Employee is required to disclose such information or material, upon becoming aware of the obligation to disclose, unless prohibited by law the Employee will provide to the Company prompt written notice so that the Company may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement; |
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| (iii) | if the Company agrees that the disclosure is required by law, it will promptly give the Employee written authorization to disclose the information for the required purposes only; |
| (iv) | if the Company promptly informs the Employee that the Company does not agree that the disclosure is required by law, this Agreement will continue to apply, except to the extent that a Court of competent jurisdiction orders otherwise; and |
| (v) | if a protective order or other remedy is not obtained or if compliance with this Agreement is waived, the Employee will furnish only that portion of the Confidential Information that is legally required and will exercise all reasonable efforts to obtain confidential treatment of such Confidential Information. |
| 3 | INTELLECTUAL PROPERTY RIGHTS |
| (a) | Property of the Company: All Inventions and Work Product will be the sole and exclusive property of the Company. |
| (b) | Notice of Invention. The Employee will promptly and fully inform the Company of all Work Product, whether or not patentable, throughout the course of their involvement, in any capacity with the Company and from which there is a reasonable basis to believe that Intellectual Property may be derived therefrom, whether or not developed before or after execution of this Agreement. On their ceasing to be employed by the Company for any reason whatsoever, the Employee will immediately deliver up to the Company all Work Product. |
| (c) | Assignment of Rights. Subject only to the exceptions set out in Attachment 1 attached to this Exhibit B, the Employee will irrevocably assign, and does hereby irrevocably assign, to the Company or, at the option of the Company and upon notice from the Company, to the Company’s designee, all of their right, title and interest in and to all Work Product, including all Intellectual Property rights therein. To the extent that the Employee retains or acquires legal title to any such Intellectual Property rights and interests, the Employee hereby declares and confirms that such legal title is and will be held by them only as trustee and agent for the Company or the Company’s designee until such time as the Employee is able to execute a binding assignment of such rights. The Employee agrees that the Company’s rights hereunder shall attach to all Intellectual Property rights in their Work Product, notwithstanding that it may be perfected or reduced to specific form after they have terminated their relationship with the Company. The Employee further agrees that the Company’s rights hereunder are worldwide rights and are not limited to Canada, but shall extend to every country of the world. |
| (d) | Moral Rights. Without limiting the foregoing, the Employee hereby irrevocably waives any and all moral rights worldwide, including without limitation those arising under the Copyright Act (Canada), as amended, or any successor legislation of similar force and effect or similar legislation in other applicable jurisdictions or at common law that they may have with respect to all Work Product, and agrees never to assert any moral rights which they may have in the Work Product, including, without limitation, the right to the integrity of the Work Product, the right to be associated with the Work Product, the right to restrain or claim damages for any distortion, mutilation or other modification or enhancement of the Work Product and the right to restrain the use or reproduction of the Work Product in any context and in connection with any product, service, cause or institution, and the Employee further confirms that the Company may use or alter any Work Product as the Company sees fits in its absolute discretion. |
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| (e) | Goodwill. The Employee hereby agrees that all goodwill that the Employee has established or may establish with clients, customers, suppliers, principals, shareholders, investors, collaborators, strategic partners, licensees, contacts or prospects of the Company relating to the Business of the Company (or of its partners, subsidiaries or affiliates), both before and after the Effective Date, shall be and remain the property of the Company exclusively, for the Company to use, alter, vary, adapt and exploit as the Company shall determine in its discretion. |
| (f) | Assistance. The Employee hereby agrees to reasonably assist the Company, at the Company’s request and expense, in: |
| (i) | making patent applications for all Work Product, including instructions to lawyers and/or patent agents as to the characteristics of the Work Product in sufficient detail to enable the preparation of a suitable patent specification, to execute all formal documentation incidental to an application for letters patent and to execute assignment documents in favour of the Company for such applications; |
| (ii) | making applications for all other forms of Intellectual Property registration relating to all Work Product; |
| (iii) | prosecuting and maintaining the patent applications and other Intellectual Property relating to all Work Product; and |
| (iv) | registering, maintaining and enforcing the patents and other Intellectual Property registrations relating to all Work Product. |
| (v) | If the Company is unable for any reason to secure the Employee’s signature with respect to any Work Product including, without limitation, to apply for or to pursue any application for any patents or copyright registrations covering such Work Product, then the Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as their agent and attorney-in-fact, to act for and in their behalf and stead to execute and file any papers, oaths and to do all other lawfully permitted acts with respect to such Work Product with the same legal force and effect as if executed by them. |
| (g) | Assistance with Proceedings. The Employee will reasonably assist the Company, at the Company’s request and expense, in connection with any defence to an allegation of infringement of another person’s intellectual property rights, claim of invalidity of another person’s intellectual property rights, opposition to, or intervention regarding, an application for letters patent, copyright or trademark or other proceedings relating to Intellectual Property or applications for registration thereof. |
| (h) | Commercialization. The Employee understands that the decision whether or not to commercialize or market any Work Product is within the Company’s sole discretion and for the Company’s sole benefit and that no royalty or other consideration will be due or payable to him as a result of the Company’s efforts to commercialize or market any such Work Product. |
| (i) | Prior Business Intellectual Property. The Employee represents and warrants to the Company that they have not brought or used, and the Employee covenants and agrees that they will not use or bring to the Company any Intellectual Property of any kind whatsoever of any Prior Business with whom the Employee had a Prior Involvement or any Intellectual Property directly owned by the Employee. The Company and the Employee acknowledge and agree that the Company is not employing the Employee to obtain Intellectual Property relating to any Prior Involvement and the Employee acknowledges that the Company has advised the Employee to comply with any legal obligations the Employee may have to such Prior Business. The Employee covenants and agrees to indemnify and hold the Company harmless from any and all losses, claims, damages, expenses, and costs (including legal costs on a solicitor-client basis) of any kind whatsoever that the Company may suffer related to any breach by the Employee of their obligations to such Prior Business in that regard. |
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| (j) | Prior Inventions. In order to have them excluded from this Exhibit B, the Employee has set forth on Attachment 1 attached to this Exhibit B a complete list of all Inventions for which a patent application has not yet been filed that they have, alone or jointly with others, conceived, developed or reduced to practice prior to the execution of this Exhibit B to which they have any right, title or interest, and which relate to the Business of the Company. If such list is blank or no such list is attached, the Employee represents and warrants that there are no such prior Inventions. |
| 4 | PUBLICITY |
The Employee shall not, without the prior written consent of the Company, make or give any public announcements, press releases or statements to the public or the press regarding any Work Product or any Confidential Information.
| 5 | FURTHER ASSURANCES |
The Parties will execute and deliver to each other such further instruments and assurances and do such further acts as may be required to give effect to this Exhibit B.
| 6 | FIDUCIARY STATUS |
The provisions of this Exhibit B are additional to and do not amend, replace or otherwise reduce the Employee’s fiduciary obligations at law or equity.
| 7 | TERMINATION OF EMPLOYMENT / SURVIVAL |
| (a) | The covenants in this Exhibit B apply regardless of which Party initiated the termination of the Employee’s employment or the reasons for the termination of the Employee’s employment. |
| (b) | If the employment of the Employee is terminated for any reason by the Employee or the Company and there is any dispute with respect to whether any obligations have been breached or to what extent compensation or other entitlements are owing to the Employee then despite the dispute and whether the Company is, or is later determined to be, otherwise in compliance with the terms and conditions of the Employee’s employment, the Employee will at all times remain bound by the post-employment obligations set out in this Exhibit B. |
| (c) | This Exhibit B will survive the termination of employment of the Employee for any reason and will continue in full force and effect. |
| 8 | NO CONFLICTING OBLIGATIONS |
The Employee hereby represents and warrants that the Employee has no agreements with or obligations to any other person with respect to the matters covered by this Exhibit B or concerning the Confidential Information that are in conflict with anything in this Exhibit B, except as disclosed in Attachment 1 attached to this Exhibit B.
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| 9 | SEVERABILITY |
For the purposes of section 9(e) of the EA, each covenant or obligation set out in this Exhibit B is a separate and distinct provision.
| 10 | INDEPENDENT LEGAL ADVICE |
The Employee agrees that the Employee has obtained or has had an opportunity to obtain independent legal advice in connection with this Exhibit B, and further acknowledges that the Employee has read, understands, and agrees to be bound by all of the terms and conditions contained herein.
| Agreed: | Date: _________________, 2021 | ||||
| SARAH LI | |||||
| Agreed: | Date: _________________, 2021 | ||||
| INMED PHARMACEUTICALS INC. |
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Attachment 1 to Exhibit B
EXCLUSIONS FROM WORK PRODUCT
| ● | Nil. |
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Exhibit C – Restrictive Covenant Agreement
Dated: March 1, 2021
| WHEREAS: |
| A. | In accordance with the terms of the Employment Agreement between the Employee and the Company dated March 1, 2021 (the “EA”), the Employee has agreed to execute this Restrictive Covenant Agreement on the terms set out herein. |
NOW THEREFORE for good and valuable consideration, including the consideration contemplated by the EA, the receipt and sufficiency of which is acknowledged by the Employee, the Employee and the Company agree as follows:
| 1 | INTERPRETATION |
The capitalized terms have the meanings ascribed to them in the EA, and the following terms have the following meanings:
| (a) | “Business” or “Business of the Company” means researching, developing, commercializing, producing and marketing novel, cannabinoid-based and other pharmaceutical therapies to treat disease combined with innovative drug delivery systems; |
| (b) | “Capacity” means as a principal, agent, employee, director, officer, advisor, shareholder, consultant or contractor. |
| (c) | “Competing Business” means any endeavor, activity or business which is competitive in any material way with the Business of the Company worldwide; |
| (d) | “Competitive Duties” means any duties that: |
| (i) | are the same or similar to any of the duties the Employee performed for the Company in the 18-month period immediately preceding the Date of Termination and relate to products and/or services that are competitive with the Business of the Company, or |
| (ii) | involve the management, direction or supervision of personnel performing any of the duties described in paragraph (i) above; |
| (e) | “Contact” means any person, firm, corporation or other entity that was a client, customer, supplier, principal, shareholder, investor, collaborator, strategic partner, licensee, contact or prospect of the Company (or of its partners or funders) with whom the Employee materially dealt or otherwise became aware of during the term of the Employee’s employment in any capacity with the Company; |
| (f) | “Restricted Period” means the 12-month period immediately following the Date of Termination; |
| (g) | “Prohibited Work” means any Employee, management, supervisory, consultation or strategic work for a Competing Business in circumstances where the Employee has Confidential Information, or had been given Confidential Information, that if used or disclosed in performing such work could be advantageous to the Competing Business in competing with the Business; and |
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| (h) | “Restricted Territory” means the United States of America and Canada and the geographic area in any other country in which the Company had material business relationships in which the Employee was materially involved at the time of or within 12 months of the Date of Termination. |
| 2 | ACKNOWLEDGEMENT |
The Employee acknowledges the following:
| (a) | The Business of the Company is highly competitive; |
| (b) | The Employee has had and will continue to have a Employee role for the Company, has had and will continue to have extensive access to, and has been and will continue to be entrusted with, highly sensitive Confidential Information and has been and will continue to be involved in and responsible for strategic, supervisory and managerial decisions for the Company; |
| (c) | The Employee has developed and will continue to develop important relationships with key Contacts such that the goodwill and competitiveness of the Business of the Company depend in part on the Employee; and |
| (d) | As a result, the Company would be vulnerable to and harmed by the Employee performing duties and work that are competitive with or detrimental to the Company for a reasonable period after the Date of Termination. |
| 3 | NON-COMPETITION |
| (a) | Restriction. During the Restricted Period, the Employee shall not, without the prior written consent of the Board acting reasonably, directly or indirectly, perform Competitive Duties or Prohibited Work for a Competing Business in any Capacity within the Restricted Territory. |
| (b) | Exception. Nothing in subsection (a) above shall prohibit the Employee from, during the Restricted Period, holding, strictly for portfolio purposes and as a passive investor, no more than five percent (5%) of the issued and outstanding shares of, or any other interest in, any corporation or other entity which is listed on any recognized stock exchange, that is a Competing Business. |
| 4 | NON-SOLICITATION OF CONTACTS |
| (a) | Restriction. During the Restricted Period the Employee shall not directly or indirectly in a manner that is competitive with the Business of the Company: |
| (i) | participate in any bid or tender process with respect to, or |
| (ii) | solicit or otherwise interfere with the relationship with the Company with |
any Contact in the Restricted Territory.
| (b) | Exception. The restriction in paragraph (a) does not apply to solicitation through broadly circulated media advertisements that are generic in nature. |
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| 5 | NON-SOLICITATION OF PERSONNEL |
| (a) | Restriction. During the Restricted Period the Employee shall not directly or indirectly solicit or entice any person who is an employee or contractor of the Company to leave employment or engagement with the Company. |
| (b) | Exception. The restriction in paragraph (a) does not apply to solicitation through broadly circulated media advertisements that are generic in nature. |
| 6 | RELATIONSHIP WITH A COMPETITIVE BUSINESS |
If the Employee has any direct or indirect relationship with a Competitive Business any time during the Restricted Period, then the Employee will have the duty and responsibility to promptly notify the Company of such relationship and cooperate in any investigation by the Company as to whether the Employee is or will be in breach of any obligation in this Exhibit C. The Employee will promptly cooperate and comply with any requests from any of the Company for information or documentation related to any such relationship with a Competitive Business.
| 7 | REASONABLENESS |
The Employee agrees and acknowledges that the covenants and obligations in this Exhibit C are given for good and valuable consideration, paid or provided in exchange for agreeing to the restrictions set out in this Exhibit C and that by reason of the Employee’s unique knowledge of and relationship with the Company and the significant competitive relationship between the Company and the Competing Businesses, the scope of these covenants and obligations as to time, activity and geographic area, the definitions of Competing Business, Competitive Duties, Prohibited Work, Restricted Period, and Restricted Territory are reasonable and give only such reasonable restrictions as are minimally necessary to protect the legitimate proprietary interests of the Company. The Employee further agrees and acknowledges that the Company may notify any employer or prospective employer of the Employee, and any other legal entity with whom the Employee has had or is having direct or indirect dealings with, of the restrictions set out in this Exhibit C when reasonably required by the Company to protect its legitimate business interests.
| 8 | FIDUCIARY STATUS |
The provisions of this Exhibit C are additional to and do not amend, replace or otherwise reduce the Employee’s fiduciary obligations at law or equity.
| 9 | TERMINATION OF EMPLOYMENT / SURVIVAL |
| (a) | The covenants in this Exhibit C apply regardless of which Party initiated the termination of the Employee’s employment or the reasons for the termination of the Employee’s employment. |
| (b) | If the employment of the Employee is terminated for any reason by the Employee or the Company and there is any dispute with respect to whether any obligations have been breached or to what extent compensation or other entitlements are owing to the Employee then despite the dispute and whether the Company is, or is later determined to be, otherwise in compliance with the terms and conditions of the Employee’s employment, the Employee will at all times remain bound by the post-employment obligations set out in this Exhibit C. |
| (c) | This Exhibit C will survive the termination of employment of the Employee for any reason and will continue in full force and effect. |
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| 10 | NO CONFLICTING OBLIGATIONS |
The Employee hereby represents and warrants that they have no agreements with or obligations to any other person with respect to the matters covered by this Exhibit C.
| 11 | SEVERABILITY |
For the purposes of section 9(e) of the EA, each covenant or obligation set out in this Exhibit C is a separate and distinct provision.
| 12 | INDEPENDENT LEGAL ADVICE |
The Employee agrees that the Employee has obtained or has had an opportunity to obtain independent legal advice in connection with this Exhibit C, and further acknowledges that the Employee has read, understands, and agrees to be bound by all of the terms and conditions contained herein.
| Agreed: | Date: _________________, 2021 | ||||
| SARAH LI | |||||
| Agreed: | Date: _________________, 2021 | ||||
| INMED PHARMACEUTICALS INC. |
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Exhibit D – Release
FOR AND IN CONSIDERATION OF the terms set out in the Employment Agreement dated March 1, 2021 (the “EA”) and other good and valuable consideration, SARAH LI (the “Employee”) agrees to remise, release and forever discharge of INMED PHARMACEUTICALS INC. (the “Company”), and the Company’s associated or related entities, subsidiaries, predecessors, successors, assigns, officers, owners, operators, directors, employees, insurers and agents and each of their associated or related entities, subsidiaries, predecessors, successors, assigns, officers, owners, operators, directors, employees, insurers and agents and each of their respective predecessors, successors, heirs, executors, administrators, and assigns from any and all manner of actions, causes of action, suits, debts, damages, covenants, contracts, costs, expenses, compensation, claims and demands whatsoever, whether in law or in equity, whether known or unknown, relating to the Employee’s employment with the Company or the cessation of that employment, and without limiting the generality of the foregoing, any claims or rights under the Employment Standards Act (British Columbia) and the Human Rights Code (British Columbia) and any other applicable provincial or federal legislation (to the maximum extent permitted by such legislation), any claims for severance pay or pay in lieu of notice of termination, damages for loss of reputation, loss of position, loss of status, loss of future job opportunities, and constructive termination, any claims arising from the manner and timing of the termination, and any claims or rights under the weekly indemnity, long term disability, incentive and other benefit plans of the Company.
Except for amounts to be paid or benefits and other entitlements to be provided to the Employee pursuant to the express terms of the EA after the date of execution of this Release, the Employee agrees and acknowledges that:
| (a) | the Employee has received, or by virtue of the terms of the EA will receive, all wages including, without limiting the generality of the foregoing, overtime pay, vacation pay, general holiday pay and pay in respect of termination of employment to which the Employee is entitled under the Employment Standards Act as of the date of this Release; |
| (b) | the Company has, or by virtue of the terms of the EA will have, satisfied all obligations to the Employee under the Employment Standards Act in relation to the Employee’s employment and the cessation of the Employee’s employment, and there is no factual or legal basis for any claim or entitlement against the Company under that statute; |
| (c) | the payments to the Employee by or on behalf of the Company are not to be construed as an admission of liability on the part of the Company, which liability is expressly denied; |
| (d) | this Release is executed by the Employee for the purpose of making a full, final and irrevocable settlement of any and all claims whatsoever and howsoever arising against the Company; |
| (e) | the Employee will not make any further claim or take any proceedings whatsoever against the Company or any other person, company or other legal entity who might claim contribution or indemnity from the Company in respect of matters which are the subject of this Release; |
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| (f) | the facts in respect of which this Release is made may prove to be other than or different from the facts now known or believed to be true, and the Employee expressly accepts and assumes the risk of the facts being different, and agrees that this Release will be in all respects enforceable and not subject to termination, rescission, or variation by discovery of any difference in facts; |
| (g) | the Employee will indemnify and hold harmless the Company from all liability, if any, for any tax, penalty, interest or any other amount of any kind whatsoever arising under any one or more of the Income Tax Act (Canada), the Employment Insurance Act (Canada), the Canada Pension Plan Act (Canada), and any other similar statute of Canada or a province or territory thereof, that arises in consequence of the performance of the obligations to the Employee by or on behalf of the Company; |
| (h) | the existence and terms of the settlement between the Employee and the Company and this Release are confidential and the Employee will not disclose, except as required by law, either the whole or part of such settlement or Release to anyone, but disclosure may be made to the Employee’s legal or financial advisors and spouse, on the condition that the Employee will ensure that those persons to whom the Employee makes disclosure maintain that confidentiality and do not disclose the existence and terms of the settlement; |
| (i) | this Release is voluntarily executed and the terms of the Release are contractual and not a mere recital; and |
| (j) | the Employee had read and understands this Release and has, prior to the execution hereof, had the opportunity to receive independent legal advice in respect hereof. |
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IN WITNESS WHEREOF SARAH LI HAS SIGNED THIS RELEASE THIS ___ DAY OF _________________, 20__.
| SARAH LI |
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Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
InMed Pharmaceuticals Inc.:
We consent to the use of our report dated September 23, 2022, with respect to the consolidated financial statements of InMed Pharmaceuticals Inc. incorporated herein by reference and to the reference to our firm under the heading “Experts” in the prospectus.
/s/ KPMG LLP
Chartered Professional Accountants
Vancouver, Canada
December 7, 2022