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Acerus Announces Rights Offering and Standby Commitment

10/20/2020

TORONTO--(BUSINESS WIRE)-- Acerus Pharmaceuticals Corporation (“Acerus” or the “Company”) (TSX: ASP, OTCQB: ASPCF) is pleased to announce that it will be offering rights (the "Rights Offering") to holders of its common shares ("Common Shares") of record at the close of business on October 27, 2020 (the "Record Date"). Pursuant to the Rights Offering, each holder of Common Shares will receive one transferable right (a "Right") for each Common Share held. Every 1.91984064 Rights will entitle a holder to purchase one Common Share at a price of $0.025per common share (the "Subscription Price"). The Rights Offering is expected to raise gross proceeds of approximately $13,165,000.

The Subscription Price is equal to approximately an 37.97% discount to the volume weighted average trading price of the Common Shares on the Toronto Stock Exchange (the "TSX") for the 5 day period ending on October 19, 2020. Based on the 1,010,988,081 Common Shares outstanding as of the date of this news release, a maximum of 526,600,000 Common Shares could be issued pursuant to the Rights Offering, representing 52.09% of the currently issued and outstanding Common Shares. The final number of Common Shares will depend on the actual number of Common Shares issued and outstanding on the Record Date. The Rights Offering will be conducted in Canada, and in those jurisdictions where Acerus may lawfully offer the Rights.

The Rights Offering will include an additional subscription privilege under which holders of Rights who fully exercise their basic subscription privilege will be entitled to subscribe pro rata for additional Common Shares, if available, that were not otherwise subscribed for in the Rights Offering.

A Rights Offering notice, together with Rights certificates, will be mailed to registered holders of Common Shares as of the Record Date. Full details of the Rights Offering, including information regarding the distributions of the Rights and the procedures to be followed, are included in the Rights Offering circular, which will be filed today, together with the Rights Offering notice, under Acerus' profile on SEDAR at www.sedar.com. To subscribe for Common Shares, a completed Rights certificate, together with payment in full of the aggregate Subscription Price for the Common Shares subscribed for, must be received by the subscription agent for the Rights Offering, TSX Trust Corporation, prior to the expiry of the Rights at 5:00 p.m. (Toronto time) on November 24, 2020. Shareholders who hold their Common Shares through an intermediary, such as a bank, trust company, securities dealer or broker, will receive materials and instructions from their intermediary.

The Rights and the Common Shares issuable upon exercise of the Rights will be listed on the TSX. The Rights will be listed for trading on the TSX beginning on October 26, 2020under the symbol "ASP.RT". Trading in the Rights on the TSX will cease at 12:00 p.m. (Toronto time) on November 24, 2020.

If you are a holder of Common Shares and reside outside of Canada please review the Rights Offering notice, circular and notice to ineligible shareholders to determine your eligibility and the process and timing requirements to receive and/or, exercise your Rights. The Company requests any ineligible shareholder interested in exercising their Rights to contact the Company at their earliest convenience.

The Rights and Common Shares issuable upon exercise of the Rights have not been and will not be registered under the United States Securities Act of 1933 (the “U.S. Securities Act”), or applicable state securities laws and may not be exercised, offered or sold, as applicable, in the United States or to or for the account or benefit of a person in the Unities States or a U.S. Person (as defined in Regulation S of the U.S. Securities Act) absent registration or an applicable exemption from the registration requirements. This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company. There shall be no offer or sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification of such securities under the laws of any such jurisdiction.

Standby Commitment Agreement

In connection with the Rights Offering, the Company has entered into a standby commitment agreement dated October 19, 2020 (the "Standby Commitment Agreement") with First Generation Capital Inc. (the "Standby Purchaser"), the Company's major shareholder. The Standby Purchaser has agreed, subject to certain terms, conditions and limitations, to purchase such number of Common Shares that are available to be purchased, but not otherwise subscribed for under the Rights Offering, that will result in 100% of the Common Shares being subscribed under the Rights Offering (the “Standby Commitment”). Pursuant to the Standby Commitment, the Company will, subject to the terms of the Standby Commitment Agreement, be guaranteed to issue at least 526,600,000 Common Shares in connection with the Rights Offering for aggregate gross proceeds of $13,165,000.

Further details of the Standby Commitment Agreement are contained in the Rights Offering circular.

As at the date hereof, the Standby Purchaser owns or exercises control or direction over, directly or indirectly, 867,134,176 Common Shares, representing approximately 85.77% of the issued and outstanding Common Shares. Assuming no Acerus shareholders exercise their Rights and the Standby Purchaser acquires 100% of the Common Shares available pursuant to the Rights Offering, the Standby Purchaser would own an aggregate of 1,393,734,176 Common Shares representing approximately 90.64% of the then issued and outstanding Common Shares.

The Standby Purchaser is a “related party” of the Company under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) because it exercises control and direction over more than 10% of the issued and outstanding Common Shares. The Rights Offering is not subject to the related party rules under MI 61-101 based on a prescribed exception related to rights offerings.

Use of Proceeds

The estimated net proceeds of the Rights Offering will be used to make repayments of principal and interest under its existing senior secured term loan credit facility with SWK Funding LLC; for research and development expenditures related to clinical and non-clinical trials for Natesto®, the Acerus’ testosterone nasal gel for androgen replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone; and for working capital expenditures.

About Acerus

Acerus Pharmaceuticals Corporation is a Canadian-based specialty pharmaceutical company focused on the commercialization and development of innovative prescription products that improve patient experience, with a primary focus in the field of men’s health. The Company commercializes its products via its own salesforce in the United States and Canada, and through a global network of licensed distributors in other territories.

Acerus’ Common Shares trade on TSX under the symbol ASP and on OTCQB under the symbol ASPCF. For more information, visit www.aceruspharma.com and follow us on Twitter and LinkedIn.

Notice Regarding Forward-Looking Statements

The TSX has not reviewed and does not accept responsibility for the adequacy of the content of the information contained herein.

This news release contains certain "forward-looking statements" and "forward-looking information". Forward-looking statements or forward-looking information involve risks, uncertainties and other factors that could cause actual results, performances, prospects and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward- looking statements or forward-looking information can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “project,” “estimate,” “expect,” “believe”, “future,” “likely,” “may,” “should,” “could”, “will” and similar references to future periods. All statements other than statements of historical fact included in this release are forward-looking statements, including, without limitation, statements regarding the timing of and other procedural matters associated with the Rights Offering; the funds to be raised under the Rights Offering; the expected participation of the Standby Purchaser in the Rights Offering, and the proposed use by Acerus of the proceeds of the Rights Offeringcontained in this news release. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements or information. Important risks, assumptions and factors that could cause actual results to differ materially from Acerus’ plans and expectations include the actual results of business negotiations; the Company’s ability to repay its debts and meet its financial covenants; adverse general economic, market or business conditions including those caused by the Covid-19 pandemic; regulatory changes and other risks and factors detailed herein and from time to time in the filings made by Acerus with securities regulators and stock exchanges, including in the section entitled “Risk Factors” in Acerus’ annual information form dated March 3, 2020 which is available at www.sedar.com. Any forward-looking statement or information only speaks as of the date on which it was made and, except as may be required by applicable securities laws, Acerus disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. Although Acerus believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance, and accordingly, investors should not rely on such statements.

Company Contact
Robert Motz
Chief Financial Officer
(905) 817-8288
rmotz@aceruspharma.com

Source: Acerus Pharmaceuticals Corporation