Appili Therapeutics Announces Closing of Public Offering of $15,525,000 and Concurrent Private Placement of $1,440,000

Appili Therapeutics Inc. (TSXV:APLI) (the “Company” or “Appili”) announced the closing of its previously announced public offering (the “Public Offering”) of units (the “Units”). The Public Offering was made pursuant to an agency agreement entered into with a syndicate of agents led by Bloom Burton Securities Inc. (the “Lead Agent”) and including Mackie Research Capital Corporation, Industrial Alliance Securities Inc., Haywood Securities Inc., and Richardson GMP Limited (collectively with the Lead Agent, the “Agents”) and the Company.

Pursuant to the Public Offering, the Company issued a total of 12,937,500 Units at a price of $1.20 per Unit for aggregate gross proceeds of $15,525,000, which includes the exercise in full by the Agents of their over-allotment option to purchase 1,687,500 additional Units for additional gross proceeds of $2,025,000. Each Unit is comprised of one Class A common share of the Company (a “Common Share”) and one-half of one Common Share purchase warrant of the Company (each whole Common Share purchase warrant, a “Warrant”). Each Warrant entitles the holder thereof to acquire one Common Share (a “Warrant Share”) at an exercise price of $1.50 per Warrant Share until June 10, 2023.

“Appili has entered the global effort to solve the COVID-19 pandemic, and our team, along with our partners, including Fujifilm Toyama Chemical and Sinai Health, are working diligently to advance this randomized controlled trial as quickly and as thoroughly as possible,” said Dr. Armand Balboni, Chief Executive Officer, Appili Therapeutics. “Appili was built to solve infectious disease problems, and we believe that favipiravir will be an important part of the arsenal that ultimately addresses this coronavirus pandemic. With the continued support from the investment community, the results of this fundraise bolsters our capacity to push forward our Phase 2 program, which is designed to address a critical unmet need for the most vulnerable COVID-19 patients.”

The Units were qualified for sale by way of a prospectus supplement dated June 5, 2020 to the short base shelf prospectus of the Company dated September 19, 2019 (collectively, the “Prospectus”). A copy of the Prospectus is available under the Company’s profile at www.sedar.com.

In connection with the Public Offering, the Company has paid the Agents an aggregate cash consideration of $1,083,390. As additional consideration, the Agents have received 902,825 broker warrants (“Broker Warrants”). Each Broker Warrant is exercisable for one Common Share (a “Broker Warrant Share”) at a price of $1.20 per Broker Warrant Share until June 10, 2022.

The Company also currently closed a non-brokered private placement of 1,200,000 Units, at the Offering Price for gross proceeds of $1,440,000 (the “Concurrent Private Placement” and with the Public Offering, the “Offerings”). No fees or commissions are payable to the Agents in connection with the Concurrent Private Placement. All securities issued pursuant to the Concurrent Private Placement are subject to a hold period of four months.

The net proceeds of the Public Offering will be used primarily towards funding planned research and development activities for the clinical trial sponsored by the Company evaluating FUJIFILM Toyama Chemical Inc.’s (“FFTC”) drug favipiravir in long-term care facilities as a potential preventative measure against COVID-19. Net proceeds of the Public Offering will also be used to fund development costs for the Company’s other product candidates, including the ATI-2307 antifungal program, the ATI-1701 tularemia vaccine program, and the antibiotic ATI-1503 program, as well as for working capital and general corporate purposes. Details as to the specific allocation of the proceeds are disclosed in the Prospectus.

The net proceeds of the Concurrent Private Placement are expected to be used to fund other research and development activities, business development activities, general and administrative expenses, and for general working capital purposes.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy the securities described herein. The securities offered have not been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or applicable state securities laws, and may not be offered or sold to, or for the account or benefit of, persons in the United States or U.S. persons (as both such terms are defined in Regulation S promulgated under the U.S. Securities Act) absent registration or an applicable exemption from such registration requirements. This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of the securities offered in any jurisdiction in which such offer, solicitation, or sale would be unlawful.

As partial consideration for its services in connection with the Public Offering, the Lead Agent received 280,777 Broker Warrants. Prior to the closing of the Offerings, the Lead Agent together with Bloom Burton & Co. Inc. and Bloom Burton Development Corporation (collectively, “Bloom Burton”), each an affiliate of the Lead Agent, beneficially owned, directly and indirectly, an aggregate of 14,350,120 Common Shares, 256,545 share purchase warrants (the “Previously Held Broker Warrants”) exercisble into 256,545 Common Shares at a price of $0.80 per Common Share until February 20, 2023, and 2,200 share purchase warrants (the ”IPO Broker Warrants”) exercisable into 8,491 Common Shares at a price of $1.10 per Common Share until November 21, 2020, representing approximately 30.24% of the then issued and outstanding Common Shares on a non-diluted basis, and 30.62% of the then issued and outstanding Common Shares on a partially-diluted basis, assuming the exercise of the IPO Broker Warrants and Previously Held Broker Warrants held by Bloom Burton and its affiliates only.

Immediately following closing of the Offerings, Bloom Burton beneficially owns, directly or indirectly, 14,350,120 Common Shares, 2,200 IPO Broker Warrants, 256,545 Previously Held Broker Warrants and 280,777 Broker Warrants, representing 23.30% of the Common Shares issued and outstanding on a non-diluted basis and 23.97% of the Common Shares issued and outstanding on a partially-diluted basis, assuming the exercise of the IPO Broker Warrants, Previously Held Broker Warrants and the Broker Warrants held by Bloom Burton only.

The Lead Agent received the Broker Warrants in the normal course of its business as a registered investment dealer. The Broker Warrants and the other securities of the Company beneficially owned, directly or indirectly, by Bloom Burton, are held for investment purposes. Bloom Burton has a long-term view of the investment and may acquire additional securities including either in the open market or through private acquisitions or sell the securities including either on the open market or through private dispositions in the future depending on market conditions, reformulation of plans and/or other relevant factors, to the extent permitted under the escrow agreement dated as of June 12, 2019 to which Bloom Burton is party.

An early warning report relating to this transaction will be filed on SEDAR under the Company’s profile at www.sedar.com. To obtain a copy of such report, please contact Sonia Yung at (416) 640-7575 or at compliance@bloomburton.com. Bloom Burton is a company existing under the laws of Ontario specializing in the healthcare investment industry with its head office at 65 Front Street East, Suite 300, Toronto, Ontario, M5E 1B5.

About Appili Therapeutics
Appili Therapeutics Inc. was founded to advance the global fight against infectious disease by matching clearly defined patient needs with drug development programs that provide solutions to existing challenges patients, doctors, and society face in this critical disease space. Appili has built a pipeline of assets designed to address a broad range of significant unmet medical needs in the infectious disease landscape. This diverse pipeline aims to address some of the most urgent threats in global public health, including ATI-2307, a novel, broad spectrum, clinical-stage antifungal candidate in development for severe and difficult-to-treat invasive fungal infections; ATI-1701, a vaccine candidate for tularemia, a very serious biological weapons threat; ATI-1503, a drug discovery program aimed at generating a novel class of antibiotics with broad-spectrum activity against Gram-negative superbugs; and ATI-1501, which employs Appili’s proprietary, taste-masked, oral-suspension technology with metronidazole for the growing number of patients with difficulty swallowing. In addition, the Company is also testing FFTC’s drug favipiravir for the prevention of COVID-19 as a potential prophylaxis treatment. Headquartered in Halifax, Nova Scotia, with offices in Toronto, Ontario, Appili is pursuing worldwide opportunities in collaboration with scientific and industry commercial partners, governments and government agencies. For more information, visit www.AppiliTherapeutics.com.

Forward looking statements
This news release contains “forward-looking statements”, including with respect to the proposed use of proceeds. Wherever possible, words such as “may “, “would”, “could “, “should”, “will,” “anticipate,” “believe,” “plan,” “expect,” “intend,” “estimate,” “potential for” and similar expressions have been used to identify these forward-looking statements. These forward-looking statements reflect the current expectations of the Company’s management for future growth, results of operations, performance and business prospects and opportunities and involve significant known and unknown risks, uncertainties and assumptions, including, without limitation, those listed in the Prospectus and the other filings made by the Company with the Canadian securities regulatory authorities (which may be viewed at www.sedar.com). Should one or more of these risks or uncertainties materialize or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by the forward-looking statements contained in this news release. These factors should be considered carefully, and prospective investors should not place undue reliance on the forward-looking statements. The Company disclaims any intention or obligation to revise forward-looking statements whether as a result of new information, future developments or otherwise, except as required by law.

Neither the TSX Venture Exchange, nor its regulation services provider (as that term is defined in the policies of the exchange), accepts responsibility for the adequacy or accuracy of this release.

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