SEC Form 424B3 filed by Eterna Therapeutics Inc.

EXPLANATORY NOTE

This prospectus forms a part of a registration statement on Form S-1, which registration statement also constitutes Post-Effective Amendment No. 1 on Form S-1 to the registrant’s registration statement on Form S-3 (File No. 333-276493) (the “January 2024 Registration Statement”), which was declared effective on January 22, 2024, and Post-Effective Amendment No. 1 on Form S-1 to the registrant’s registration statement on Form S-3 (File No. 333-273977) (the “August 2023 Registration Statement” and together with the January 2024 Registration Statement, the “Prior Registration Statements”)), which was declared effective on August 22, 2023, and is being filed pursuant to the undertakings in Item 17 of the Prior Registration Statements to update and supplement the information contained therein, as declared effective by the Securities and Exchange Commission on January 22, 2024 and August 22, 2023, respectively.

Filed pursuant to Rule 424(b)(3)

Registration Statement No. 333-283003

(Pursuant to Rule 429, also
Registration No. 333-276493 and
Registration No. 333-273977)

PROSPECTUS

Eterna Therapeutics, Inc.

Up to 49,870,566 Shares of Common Stock

This prospectus relates to the offering and resale from time to time by the selling stockholders identified in this prospectus of up to 49,870,566 shares of our common stock, $0.005 par value per share, composed of:

For additional information regarding the transactions in which the securities described above were issued to the selling stockholders, see the sections of this prospectus titled “Prospectus Summary— Recent Events” and “Selling Stockholders.”

We are not selling any shares of common stock under this prospectus and we will not receive any proceeds from the sale by the selling stockholders of such shares. We will, however, receive the proceeds from the exercise of the warrant issued in the December 2022 private placement to the extent the exercise price is paid in cash.

Sales of the shares by the selling stockholders may occur at fixed prices, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. The selling stockholders may sell shares to or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling stockholders, the purchasers of the shares, or both. For more information about how the selling stockholders may sell their shares of common stock, see the section of this prospectus titled “Plan of Distribution.”

We are paying the cost of registering the shares of common stock covered by this prospectus as well as various related expenses. The selling stockholders are responsible for all broker or similar commissions related to the offer and sale of their shares.

Our common stock is listed on the Nasdaq Capital Market under the symbol “ERNA.” On November 14, 2024, the closing price of our common stock as reported on The Nasdaq Capital Market was $0.95.

We are a “smaller reporting company” as defined under federal securities law and we have elected to comply with certain reduced public company reporting requirements available to smaller reporting companies. See the section titled “Prospectus Summary— Implications of Being a Smaller Reporting Company.”

Investing in our securities involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” on page 5 of this prospectus and any similar section contained in any amendment or supplement to this prospectus and under similar headings in the documents that are incorporated by reference into this prospectus.

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.

The date of this prospectus is November 15, 2024

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”). Under this registration statement, the selling stockholders may, from time to time, sell in one or more offerings the common stock described in this prospectus.

We incorporate by reference important information into this prospectus. You may obtain the information incorporated by reference without charge by following the instructions under “Incorporation of Documents by Reference.” You should carefully read this prospectus as well as additional information described under “Incorporation of Documents by Reference,” before deciding to invest in our securities.

Neither we nor any selling stockholder has authorized anyone to provide you with additional information or information different from that contained in, or incorporated by reference into, this prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. The information contained in this prospectus is accurate only as of the date on the front cover page of this prospectus, or other earlier date stated in this prospectus, regardless of the time of delivery of this prospectus or of any sale of our securities. Our business, financial condition, results of operations and future prospects may have changed since that date.

For investors outside the United States (“U.S.”): We have not done anything that would permit this offering or the possession or distribution of this prospectus in any jurisdiction where action for those purposes is required, other than in the U.S. Persons outside the U.S. who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities and the distribution of this prospectus outside of the U.S.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks, uncertainties and assumptions. You should not place undue reliance on these forward-looking statements. All statements other than statements of historical fact in this prospectus are forward-looking statements. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs. In some cases, you can identify these forward-looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimate,” “expects,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words. These forward-looking statements include, but are not limited to, statements concerning the following: our ability to raise capital to fund our operations; the sufficiency of our working capital to fund our operations in the near and long term, which raises doubt about our ability to continue as a going concern; our dependence on in-licensed intellectual property; our ability to enter into and sustain strategic partnerships with respect to the potential licensing of our intellectual property; our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; our intellectual property position and strategy; developments relating to our competitors and our industry; the impact of government laws and regulations; the initiation, timing, progress, and results of our research and development; and our ability to maintain the listing of our common stock on The Nasdaq Capital Market.

Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, without limitation: we will need additional funding, and we cannot guarantee that we will find adequate sources of capital in the future; we have incurred significant losses since our inception and may be unable to obtain additional funds before we achieve positive cash flows; we may not be able to generate sufficient cash flow or raise adequate financing to grow or scale our business or to fund our operations; we may be unable to protect our intellectual property rights and we may be liable for infringing the intellectual property rights of others; our common stock may be delisted by Nasdaq; and the price of our common stock may be volatile. We discuss many of these risks in greater detail under “Risk Factors” in this prospectus, in the “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections incorporated by reference from our most recent Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q for the quarterly periods ended subsequent to our filing of such Annual Report on Form 10-K, as well as any amendments thereto reflected in subsequent filings with the SEC. Moreover, 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 any forward-looking statement. In light of these risks, uncertainties and assumptions, the forward-looking statements in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied by forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance or events or circumstances reflected in forward-looking statements will be achieved or occur.

Also, forward-looking statements represent our estimates and assumptions only as of the date of the document containing the applicable statement. Unless required by law, we undertake no obligation to update or revise any forward-looking statements to reflect new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should read this prospectus, any applicable prospectus supplement, together with the documents that we have filed with the SEC that are incorporated by reference an, 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 the foregoing documents by these cautionary statements.

You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, performance and events and circumstances may be materially different from what we expect.

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risk factors discussed under the heading “Risk Factors” in our most recent Annual Report on Form 10-K, as updated by our subsequent quarterly reports on Form 10-Q and other reports and documents that are incorporated by reference into this prospectus, before deciding whether to purchase any of our common stock in this offering. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also adversely affect our business, prospects, financial condition, and/or operating results. The occurrence of any known or unknown risks might cause you to lose all or part of your investment in our securities.

SELLING STOCKHOLDERS

Background

December 2022 Private Placement of Shares of Common Stock and Warrants

In December 2022, we closed a private placement with certain selling stockholders (the “December 2022 private placement”) in which we sold to such selling stockholders an aggregate of 2,184,950 units, each unit consisting of (i) one share of our common stock and (ii) two warrants, each exercisable to purchase one share of our common stock (the “December 2022 warrants”), for an aggregate purchase price of approximately $7.7 million, consisting of $3.53 per unit (inclusive of $0.125 per December 2022 warrant).

When issued, the December 2022 warrants had an exercise price of $3.28 per share of common stock, subject to customary adjustments, and expired five-and-one-half years from the date of issuance. In connection with the issuance of the December 2023 convertible notes (as defined below), the exercise prices of the December 2022 warrants were reduced from $3.28 to $1.43 per share. The December 2022 warrants became exercisable six months following the closing of the December 2022 private placement. The December 2022 warrants purchased by certain of the selling stockholders had a provision pursuant to which such warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99% or 9.99% of our common stock immediately after exercise thereof.

As described below under “—October 2024 Exchange Transactions,” other than one December 2022 warrant to purchase approximately 0.1 million shares of our common stock, all the December 2022 warrants were exchanged for shares of our common stock.

In connection with the December 2022 private placement, we entered into a registration rights agreement with certain selling stockholders, pursuant to which we agreed to register the resale of the shares of common stock issued in the December 2022 private placement and the shares of common stock issuable upon exercise of the December 2022 warrants.

July 2023 Private Placement of Notes and Warrants

In July 2023, we closed a private placement with certain selling stockholders (the “July 2023 private placement”) in which we sold to such selling stockholders in the aggregate (i) $8,715,000 in principal amount of 6.0% senior convertible promissory notes due July 2028 (the “July 2023 convertible notes”) and (ii) warrants to purchase 6,094,392 shares of our common stock (the “July 2023 warrants”).

When issued, the July 2023 convertible notes were convertible into shares of our common stock at an initial conversion price of $2.86, subject to customary adjustments. The July 2023 convertible notes were our general senior unsecured obligations and ranked equal in right of payment with all of our existing and future unsubordinated indebtedness. The July 2023 convertible notes bore interest at 6.0% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, commencing on October 15, 2023. At our election, we could pay interest either in cash or in-kind by increasing the outstanding principal amount of the July 2023 convertible notes. The July 2023 convertible notes were to mature on July 14, 2028, unless earlier converted or repurchased. The July 2023 convertible notes purchased by certain of the selling stockholders had a provision pursuant to which such convertible notes could not be converted if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99%, 9.99% or 19.99% immediately after conversion thereof, subject to certain increases not in excess of either 9.99% or 19.99% at the option of such holder.

When issued, the July 2023 warrants had an exercise price of $2.61 per share of common stock, subject to customary adjustments, were immediately exercisable, and expired five years from the date of issuance. The July 2023 warrants purchased by certain of the selling stockholders had a provision pursuant to which such warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99%, 9.99% or 19.99% immediately after exercise thereof, subject to certain increases not in excess of either 9.99% or 19.99% at the option of such holder.

As described below under “—October 2024 Exchange Transactions,” all the July 2023 warrants and July 2023 convertible notes were exchanged for shares of our common stock.

In connection with the July 2023 private placement, we entered into a registration rights agreement with certain selling stockholders pursuant to which we agreed to register the shares of common stock issuable upon conversion of the July 2023 convertible notes and the shares common stock issuable upon exercise of the July 2023 warrants.

December 2023 Private Placement of Notes and Warrants

In December 2023 and January 2024, we closed a private placement with certain selling stockholders (the “December 2023 private placement”) in which we sold to such selling stockholders in the aggregate (i) $9,193,000 in principal amount of 12.0% senior convertible promissory notes due five years from issuance (the “December 2023 convertible notes” and together with the July 2023 convertible notes, the “convertible notes”) and (ii) warrants to purchase 9,579,014 shares of common stock (the “December 2023 warrants”).

When issued, the December 2023 convertible notes were convertible into shares of our common stock at an initial conversion price of $1.9194, subject to customary adjustments. The terms of the December 2023 convertible notes were substantially similar to the terms of the July 2023 convertible notes except that interest on the December 2023 convertible notes was 12.0% per annum payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, commencing on January 15, 2024, and the December 2023 convertible notes matured five years from the date of issuance.

When issued, the December 2023 warrants had an exercise price of $1.43 per share of common stock, subject to customary adjustments, were immediately exercisable, and expired five years from the date of issuance. The December 2023 warrants purchased by certain of the selling stockholders had a provision pursuant to which such warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99%, 9.99% or 19.99% immediately after exercise thereof, subject to certain increases not in excess of either 9.99% or 19.99% at the option of such holder.

As described below under “—October 2024 Exchange Transactions,” all the December 2023 warrants and December 2023 convertible notes were exchanged for shares of our common stock.

In connection with the December 2023 private placement, we entered into a registration rights agreement with certain selling stockholders pursuant to which we agreed to register the shares of common stock issuable upon conversion of the December 2023 convertible notes and the shares common stock issuable upon exercise of the December 2023 warrants.

October 2024 Private Placement of Shares of Common Stock

On September 24, 2024, we entered into a securities purchase agreement with certain selling stockholders pursuant to which we agreed to sell to such selling stockholders in a private placement (the “October 2024 private placement”) an aggregate of 1,516,994 shares of our common stock (or, in lieu thereof, pre-funded warrants to purchase one share of our common stock) for a purchase price of $0.75 per share of common stock and $0.75 less $0.005 per share of common stock subject to pre-funded warrants.

In addition to the satisfaction or waiver of customary conditions to closing, in order to comply with Nasdaq rules and regulations, the closing of the October 2024 private placement was subject to the approval by our stockholders of: (i) the issuance of the shares of our common stock and pre-funded warrants (and the issuance of shares of our common stock upon exercise of the pre-funded warrants) in the October 2024 private placement; (ii) the issuance of shares of our common stock in connection with the Exchange Transactions (as such term is defined below); (iii) the issuance of shares of our common stock and/or pre-funded warrants upon conversion of the bridge notes (as defined below); and (iv) all transactions related thereto. Such stockholder approval was obtained at our annual meeting of stockholders held on October 29, 2024. The October 2024 private placement closed thereafter on the same day, and in connection therewith we issued an aggregate of 1,401,994 shares of our common stock and a pre-funded warrant to purchase 115,000 shares of our common stock.

Each pre-funded warrant issued in the October 2024 private placement has an exercise price of $0.005 per share of common stock, subject to customary adjustments, is exercisable at any time, and will not expire until exercised in full. A holder may not exercise their pre-funded warrant to the extent that the aggregate number of shares of our common stock beneficially owned by such holder, together with any other person whose beneficial ownership of our common stock would or could be aggregated with such holder’s for purposes of Section 13(d) of the Exchange Act, immediately after such exercise would exceed 9.99% of the number of shares of our common stock then outstanding.

October 2024 Exchange Transactions

Also on September 24, 2024, we entered into exchange agreements with the holders of the convertible notes, the December 2022 warrants, the July 2023 warrants, and the December 2023 warrants. The parties to the exchange agreements represented the holders of all the outstanding convertible notes and all the outstanding December 2022 warrants, the July 2023 warrants, the December 2023 warrants except for the holder of a December 2022 warrant to purchase approximately 0.1 million shares of our common stock.

Subject to approval by our stockholders, under the exchange agreements (i) the holders of the December 2022 warrants, the July 2023 warrants, the December 2023 warrants agreed to exchange all their warrants for shares of our common stock at an exchange ratio of 0.5 of a share of common stock for every one share of common stock issuable upon exercise of the applicable warrant (rounded up to the nearest whole number), and (ii) the holders of the convertible notes agreed to exchange all their convertible notes for shares of our common stock at an exchange ratio equal to (A) the sum expressed in U.S. dollars of (1) the principal amount of the applicable convertible note, plus (2) all accrued and unpaid interest thereon through the date the applicable convertible note is exchanged plus (3) all interest that would have accrued through, but not including, the maturity date of applicable convertible note if it was outstanding from the date such convertible note is exchanged through its maturity date, divided by (B) $1.00 (rounded up to the nearest whole number) (the “Exchange Transactions”). Such stockholder approval was obtained at our annual meeting of stockholders held on October 29, 2024. The closing of the Exchange Transactions occurred thereafter on that same date, and in connection therewith we issued an aggregate of 38,302,029 shares of our common stock.

September 2024 Private Placement of Bridge Notes and Conversion

Also on September 24, 2024, we entered into a note purchase agreement with certain selling stockholders pursuant to which we sold to such selling stockholders in a private placement (the “September 2024 bridge note private placement”) an aggregate principal amount of approximately $3.9 million of 12.0% senior convertible notes (the “bridge notes”). The terms of the bridge notes were substantially similar to the terms of the December 2023 convertible notes except that the bridge notes were not convertible except as described below, payments commenced on October 15, 2024, and the bridge notes matured one year from the date of issuance.

As a result of the stockholder approval being obtained at our annual meeting of stockholders held on October 29, 2024, in accordance with the terms of the bridge notes, approximately $3.0 million of the principal amount of the bridge notes plus all accrued and unpaid interest thereon, plus such amount of interest that would have accrued on the principal amount through December 24, 2024, was automatically converted at a conversion price of $0.50 into 6,244,237 shares of our common stock, and approximately $0.9 million of the principal amount of the bridge notes plus all accrued and unpaid interest thereon, plus such amount of interest that would have accrued on the principal amount through December 24, 2024, was automatically converted at a conversion price of $0.50 into pre-funded warrants to purchase 1,764,000 shares of our common stock. The terms of the pre-funded warrants issued upon conversion of the bridge notes are substantially the same as the terms of the pre-funded warrants issued in the October 2024 private placement described above.

Selling Stockholder Information

Throughout this prospectus, when we refer to the shares of our common stock being registered on behalf of the selling stockholders for offer and resale, we are referring to the following shares:

When we refer to selling stockholders in this prospectus, we are referring to the selling stockholders identified in this prospectus and, as applicable, their permitted transferees or other successors-in-interest that may be identified in a supplement to this prospectus or, if required, a post-effective amendment to the registration statement of which this prospectus is a part.

The table below lists the selling stockholders and, to our knowledge, other information regarding the beneficial ownership of the shares of our common stock by the selling stockholders as of October 31, 2024 (the “Measurement Date”). The information in the table below with respect to the selling stockholders has been obtained from the applicable selling stockholder. As noted in the footnotes to the table below, certain selling stockholders own pre-funded warrants to purchase shares of our common stock. Such pre-funded warrants may not exercised by the selling stockholder to the extent that the aggregate number of shares of our common stock beneficially owned by such selling stockholder, together with any other person whose beneficial ownership of our common stock would or could be aggregated with such selling stockholder’s for purposes of Section 13(d) of the Exchange Act, immediately after such exercise would exceed 9.99% of the number of shares of our common stock then outstanding. The number reported in the “Number of Shares of Common Beneficially Owned Prior to this Offering” column of the table below gives effect to such beneficial ownership limitation. The number reported in the “Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus” column of the table below does not give effect to such beneficial ownership limitation. Therefore, the number reported in the “Number of Shares of Common Beneficially Owned Prior to this Offering” column may be less than the number reported in the “Number of Shares of Common Beneficially Owned Prior to this Offering” column. The number of shares referenced in the “Number of Shares of Common Stock Owned After this Offering” column in the table below assumes that the applicable selling stockholders sells all the shares of common stock offered pursuant to this prospectus. The selling stockholders may sell all, some or none of their respective shares in this offering. See “Plan of Distribution.” The percentage of beneficial ownership of our common stock is based on 51,374,716 shares of our common stock outstanding as of the Measurement Date. Beneficial ownership is determined in accordance with SEC rules, which generally provide that a person is the beneficial owner of a security if he, she or it possesses sole or shared voting or investment power over that security, including derivative securities, such as options and warrants, that are currently exercisable or exercisable within 60 days. In computing the number of shares beneficially owned by a selling stockholder and the percentage ownership of that selling stockholder, all shares underlying derivative securities held by such selling stockholder are deemed outstanding if such securities are currently exercisable or become exercisable within 60 days after the Measurement Date; however, such shares are not deemed outstanding for the purpose of calculating the percentage ownership of any other selling stockholder.

Certain Relationships and Related Party Transactions

Except as described below, none of the selling stockholders or any persons having control over such selling stockholders has held any position or office with us or our affiliates within the last three years or has had a material relationship with us or any of our predecessors or affiliates within the past three years, other than as a result of the ownership of our shares or other securities or as otherwise disclosed in the footnotes to the table immediately above.

Charles Cherington served on our board of directors from March 2021 to July 6, 2023, and Nicholas Singer served on our board of directors from March 25, 2021 to April 16, 2021 and from June 2022 to July 6, 2023. Messrs. Cherington and Singer participated in each of the December 2022 private placement, July 2023 private placement, December 2023 private placement, Exchange Transactions, and September 2024 bridge note private placement on the same terms and subject to the same conditions as all other investors in such transactions.

PLAN OF DISTRIBUTION

Each selling stockholder 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 principal Trading 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 stockholder may use any one or more of the following methods when selling securities:

The selling stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act, if available, rather than under this prospectus. The selling stockholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. Such sales may be made on one or more exchanges or in the over-the-counter market or otherwise, at prices and under terms then prevailing or at prices related to the then current market price or in negotiated transactions.

In addition, a selling stockholder that is an entity may elect to make an in-kind distribution of securities to its members, partners or stockholders pursuant to the registration statement of which this prospectus is a part by delivering a prospectus with a plan of distribution. Such members, partners or stockholders would thereby receive freely tradeable securities pursuant to the distribution through a registration statement. To the extent a distributee is an affiliate of ours (or to the extent otherwise required by law), we may file a prospectus supplement in order to permit the distributees to use the prospectus to resell the securities acquired in the distribution. The selling stockholders also may transfer the securities in other circumstances, in which case the transferees, pledgees or other successors-in-interest will be the selling beneficial owners for purposes of this prospectus. Upon being notified by the selling stockholders that a donee, pledgee, transferee, other successor-in-interest intends to sell our securities, we will, to the extent required, promptly file a supplement to this prospectus to name specifically such person as a selling stockholder.

Broker dealers engaged by the selling stockholders may arrange for other brokers dealers to participate in sales. Broker dealers may receive commissions or discounts from the selling stockholders (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 stockholders 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 stockholders 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 stockholders 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).

The selling stockholders 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 stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the selling stockholders 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 stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144 without the requirement for the Company 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, subject to certain exceptions, simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders 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 stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders 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).

USE OF PROCEEDS

We will not receive any of the proceeds from the sale or other disposition of shares of our common stock held by the selling stockholders pursuant to this prospectus. We will, however, receive the proceeds from the exercise of the warrant issued in the December 2022 private placement to the extent the exercise price is paid in cash. If such warrant is exercised in full at its current exercise price, we would receive gross proceeds of approximately $0.2 million. We intend to use the net proceeds of such warrant exercise, if any, for research and development, general and administrative expenses, and for working capital purposes. We can make no assurances that the warrant will be exercised, or if exercised, that the exercise price will be paid in cash.

We will bear the out-of-pocket costs, expenses and fees incurred in connection with the registration of shares of our common stock to be sold by the selling stockholders pursuant to this prospectus. Other than registration expenses, the selling stockholders will bear their own broker or similar commissions payable with respect to sales of shares of our common stock.

DESCRIPTION OF CAPITAL STOCK

The following summary of the material terms of our capital stock is not intended to be a complete summary of the rights and preferences of such securities. We urge you to read our restated certificate of incorporation, including the amendments thereto, which we refer to as our certificate of incorporation, and our amended and restated bylaws, which we refer to our bylaws, in its entirety for a complete description of the rights and preferences of our capital stock.

Authorized and Outstanding Stock

Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.005 per share, and 1,000,000 shares of preferred stock, par value $0.005 per share. A total of 156,112 shares of preferred stock have been designated as Series A Convertible Preferred Stock. As of October 31, 2024, 51,374,713 shares of common stock were outstanding and 156,112 shares of Series A Convertible Preferred Stock were outstanding.

Common Stock

Voting Rights

Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Votes may be cast in person or by proxy. Stockholders do not have cumulative voting rights with respect to election of directors.

Dividends

The holders of Series A Convertible Preferred Stock are entitled to receive cumulative dividends of $0.10 per share per annum, payable semiannually in equal installments of $0.05 per share on June 1 and December 1 of each year. After the requirements with respect to the preferential dividends of the preferred stock have been met, holders of common stock are entitled to receive proportionately any dividends as may be declared and paid on common stock from funds lawfully available therefor as and when determined by the board of directors, subject to any preferential dividend rights of outstanding preferred stock.

Liquidation and Dissolution

In the event of our liquidation or dissolution, the holders of common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock.

Other Rights

Holders of common stock have no preemptive, subscription, redemption or conversion rights and there are no sinking fund provisions with respect to our common stock. The rights, preferences and privileges of holders of common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock. All of the shares of the common stock currently issued and outstanding are fully-paid and nonassessable.

Provisions of Our Certificate of Incorporation and Bylaws and Delaware General Corporation Law may have Anti-Takeover Effects

Our certificate of incorporation and bylaws and the Delaware General Corporation Law (“DGCL”) contain provisions that could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which are summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids and are designed in part to encourage persons seeking to acquire control of us to first negotiate with the board of directors.

Number of Directors; Vacancies

Our certificate of incorporation provides that the number of directors is established by the board of directors, which may delay the ability of stockholders to change the composition of a majority of the board. The board has the exclusive right to elect a director to fill any vacancy or newly created directorship.

Removal of Directors

A director may be removed only by the affirmative vote of the holders of at least 80% of the voting power of all shares entitled to vote generally in the election of directors, voting together as a single class.

Stockholder Action by Written Consent; Special Meetings

Our certificate of incorporation provides that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such holders. Our certificate of incorporation and bylaws also provide that, except as otherwise required by law, special meetings of our stockholders can only be called by the board of directors. These provisions may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors.

Advance Notice Requirements for Stockholder Proposals

Our bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders, including proposed nominations of persons for election to the board of directors. Stockholders at an annual meeting may consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board or by a stockholder of record on the record date for the meeting who is entitled to vote at the meeting and who has delivered timely written notice in proper form to our secretary of the stockholder’s intention to bring such business before the meeting. These provisions could have the effect of delaying until the next stockholder meeting stockholder actions that are favored by the holders of a majority of our outstanding voting securities.

Delaware Business Combination Statute

We are a Delaware corporation subject to Section 203 of the DGCL. Under Section 203, certain “business combinations” between a Delaware corporation whose stock is listed on a national securities exchange or held of record by more than 2,000 stockholders and an “interested stockholder” are prohibited for a three-year period following the date that such stockholder became an interested stockholder, unless:

The three-year prohibition also does not apply to some business combinations proposed by an interested stockholder following the announcement or notification of an extraordinary transaction involving the corporation and a person who had not been an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority of the corporation’s directors. The term “business combination” is defined generally to include mergers or consolidations between a Delaware corporation and an interested stockholder, transactions with an interested stockholder involving the assets or stock of the corporation or its majority-owned subsidiaries and transactions which increase an interested stockholder’s percentage ownership of stock, or other transaction resulting in a financial benefit to the interested stockholder. The term “interested stockholder” is defined generally as those stockholders who become beneficial owners of 15% or more of a Delaware corporation’s voting stock, together with the affiliates or associates of that stockholder.

Certificate of Incorporation or Bylaws

Any provision of our certificate of incorporation may be amended, altered, changed or repealed in any manner prescribed by law; provided, that (a) the affirmative vote of the holders of at least 80% of the voting power of all shares entitled to vote generally in the election of directors, voting together as a single class, is required to alter, amend, or repeal, or adopt any provision inconsistent with Article X of the certificate of incorporation, which contains the prohibition on stockholder action by written consent and the requirement that special meetings be called only by the board of directors, and (b) Article XI of the certificate of incorporation, provides that, subject to certain exceptions, no purchase by or from any Controlling Person (as defined below) of shares of our stock owned by such Controlling Person shall be made at a price exceeding the average price paid by such Controlling Person for all shares of our stock acquired by such Controlling Person during the two-year period preceding the date of such proposed purchase unless such purchase is approved by the affirmative vote of not less than a majority of the voting power of the shares of our stock entitled to vote held by Disinterested Stockholders (as defined below), may not be amended without the affirmative vote of not less than a majority of the our stock entitled to vote thereon, provided that if, at the time of such vote, there shall be one or more Controlling Persons, such affirmative vote shall include the affirmative vote in favor of such amendment of not less than a majority of the voting power of the shares of our stock entitled to vote thereon held by Disinterested Stockholders. “Controlling Person” means any individual, corporation, partnership, trust, association or other organization or entity (including any group formed for the purpose of acquiring, voting or holding our securities) which either directly, or indirectly through one or more intermediaries, owns, beneficially or of record, or controls by agreement, voting trust or otherwise, at least 10% of the voting power of stock, and such term also includes any corporation, partnership, trust, association or other organization or entity in which one or more Controlling Persons have the power, through the ownership of voting securities, by contract, or otherwise, to influence significantly any of the management, activities or policies of such corporation, partnership, trust, association, other organization or entity. “Disinterested Stockholders” means those holders of stock entitled to vote on any matter, none of which is a Controlling Person.

Our board of directors may, by majority vote, amend or repeal our bylaws and may adopt new bylaws. Our stockholders may not adopt, amend, or repeal our bylaws or adopt new bylaws except by the vote or written consent of at least 66-2/3% of the voting power of our company.

Exclusive Forum Selection

Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the a state court located in the State of Delaware (or if no state court has jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to our company or stockholders, (c) any action asserting a claim against us arising pursuant to any provision of the DGCL or our certificate of incorporation or amended and restated bylaws, or (d) any action asserting a claim against us governed by the internal affairs doctrine. Although our bylaws contain the choice of forum provision described above, it is possible that a court could rule that such a provision is inapplicable for a particular claim or action or that such provision is unenforceable.

Authorized but Unissued Shares

Our authorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval, subject to any limitations imposed by the listing requirements of The Nasdaq Capital Market. These additional shares may be used for a variety of corporate finance transactions, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could make it more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

Listing on the Nasdaq Capital Market

Our common stock is listed on the Nasdaq Capital Market under the symbol “ERNA.”

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Computershare Trust Company, N.A.

LEGAL MATTERS

The validity of the shares of common stock offered by this prospectus has been passed upon for us by Sheppard, Mullin, Richter & Hampton LLP, San Diego, California.

EXPERTS

The audited financial statements incorporated by reference in this prospectus and elsewhere in the registration statement have been so incorporated by reference in reliance upon the report of Grant Thornton LLP, independent registered public accountants, upon the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

We maintain a website at www.eternatx.com. You may access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act with the SEC free of charge at our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not incorporated by reference into, and is not part of, this prospectus.

This prospectus is part of a registration statement we filed with the SEC. This prospectus does not contain all of the information set forth in the registration statement and the exhibits to the registration statement. For further information with respect to us and the securities we are offering under this prospectus, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Statements contained in this prospectus or incorporated by reference into this prospectus concerning the contents of any contract or any other documents are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, of which this prospectus forms a part, please see the copy of the contract or document that has been filed. Each statement in this prospectus or incorporated by reference into this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit.

INCORPORATION OF DOCUMENTS BY REFERENCE

This prospectus is part of a registration statement on Form S-1. That registration statement includes and incorporates by reference additional information and exhibits. The SEC permits us to “incorporate by reference” the information contained in documents we file with the SEC, which means that we can disclose important information to you by referring you to those documents rather than providing such information in this prospectus. Information that is incorporated by reference is considered to be part of this prospectus and you should read it with the same care that you read this prospectus. Information in documents that we file later with the SEC will automatically update and supersede the information that is either contained in, or incorporated by reference into, this prospectus, and will be considered to be a part of this prospectus from the date those documents are filed. We incorporate by reference the documents listed below (other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K) that we have filed with the SEC (File No. 001-11460):

In addition, all documents (other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits furnished with such reports related to such items, unless such current report expressly provides to the contrary, and other portions of documents that are furnished, but not filed, pursuant to applicable rules promulgated by the SEC) subsequently filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of this offering, shall be deemed to be incorporated by reference into this prospectus.

We will provide to each person, including any beneficial owner, to whom this prospectus is delivered, upon written or oral request and at no cost to the requester, a copy of any or all of the reports or documents incorporated by reference into this prospectus, including any exhibits specifically incorporated by reference in any such reports or documents, but not delivered with this prospectus. You should direct any requests for reports or documents to:

Eterna Therapeutics Inc.
1035 Cambridge Street, Suite 18A
Cambridge, MA 02141
(212) 582-1199

You also may access the incorporated reports and documents on our website at www.eternatx.com. We do not incorporate the information on our website into this prospectus or any supplement to this prospectus and you should not consider any information on, or that can be accessed through, our website as part of this prospectus or any supplement to this prospectus (other than those filings with the SEC that we specifically incorporate by reference into this prospectus or any supplement to this prospectus).

Any statement contained in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed modified, superseded or replaced for purposes of this prospectus to the extent that a statement contained in this prospectus modifies, supersedes or replaces such statement. Any statement contained herein or in any document incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded for purposes of the registration statement of which this prospectus forms a part to the extent that a statement contained in any other subsequently filed document which also is or is deemed to be incorporated by reference modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed to constitute a part of the registration statement of which this prospectus forms a part, except as so modified or superseded.

Up to 49,870,566 Shares of Common Stock

Eterna Therapeutics Inc.

PROSPECTUS

November 15, 2024