Dermata Therapeutics Announces Closing of $2.55 Million Private Placement Priced At-The-Market Under Nasdaq Rules

Rhea-AI Summary

Dermata Therapeutics (NASDAQ:DRMA) has closed a private placement offering, raising $2.55 million through the issuance of 2,007,880 shares of common stock and accompanying warrants. The offering was priced at $1.27 per share, at-the-market under Nasdaq rules.

The warrants, also exercisable at $1.27 per share, will become active upon stockholder approval and expire after five years. Company insiders, including the CEO, CFO, and board members, participated in the offering at the same price as other investors. H.C. Wainwright & Co. served as the exclusive placement agent.

The net proceeds, combined with existing cash, are expected to fund operations into Q3 2025. The funds will support research, clinical trials, technology development, potential acquisitions, and working capital. The securities were offered under Section 4(a)(2) of the Securities Act and have not been registered, with the company agreeing to file a resale registration statement.

Positive

• Company insiders participated in the offering, demonstrating management confidence
• Funding extends operational runway into Q3 2025
• Successfully raised $2.55 million in gross proceeds

Negative

• Dilutive effect on existing shareholders through new share issuance
• Additional dilution possible through warrant exercise
• Securities not registered, limiting immediate tradability

Insights

Financial Analyst

This $2.55M private placement represents a strategic financing move with several notable aspects. The pricing at $1.27 per share, showing a 6.7% premium to current market price, suggests relatively strong investor confidence in DRMA's prospects. The significant insider participation, including the CEO, CFO and board members, sends a positive signal about management's alignment with shareholders.

The warrant structure, while creating potential future dilution of approximately 100% (based on the 2,007,880 shares and equal number of warrants), provides additional upside potential for investors while giving DRMA a possible future funding source if exercised. The five-year term offers considerable flexibility, though it requires shareholder approval for exercise.

The extension of cash runway into Q3 2025 is particularly important for DRMA's late-stage biotech operations. This timeline allows the company to advance its skin disease treatment pipeline without immediate financing pressure. The broad use of proceeds, including research, clinical trials and potential M&A activities, provides management with strategic flexibility to pursue value-creating opportunities.

However, investors should note that while the deal structure and insider participation are positive indicators, the relatively modest size of the raise suggests a focused approach to capital deployment. The registration rights agreement for resale could create some near-term selling pressure once effective.

Legal Expert

The legal framework of this private placement is meticulously structured to comply with securities regulations while providing future liquidity options. The Section 4(a)(2) and Regulation D exemptions allow for efficient capital raising without immediate SEC registration, though the company has committed to file a resale registration statement per the registration rights agreement.

The requirement for shareholder approval before warrant exercise represents a key governance checkpoint. This provision protects current shareholders' interests while ensuring compliance with Nasdaq listing rules regarding potential significant dilution. The at-market pricing structure under Nasdaq rules demonstrates regulatory compliance while maintaining market-based valuation principles.

The inclusion of registration rights adds value for private placement participants by providing a clear path to future liquidity. However, the unregistered status of the securities creates immediate transfer restrictions, effectively implementing a temporary lock-up period until the resale registration becomes effective.

SAN DIEGO, CA / ACCESS Newswire / January 23, 2025 / Dermata Therapeutics, Inc. (NASDAQ:DRMA)(NASDAQ:DRMAW) ("Dermata," or the "Company"), a late-stage biotechnology company focused on the treatment of medical and aesthetic skin diseases and conditions, today announced the closing of its previously announced private placement for the issuance and sale of an aggregate of 2,007,880 shares of common stock (or pre-funded warrants in lieu thereof) and accompanying warrants to purchase up to 2,007,880 shares of common stock at a purchase price of $1.27 per share of common stock (or per pre-funded warrant in lieu thereof) and accompanying warrant priced at-the-market under the rules of the Nasdaq Stock Market. The gross proceeds from the offering were approximately $2.55 million, prior to deducting placement agent's fees and other offering expenses payable by the Company. The warrants have an exercise price of $1.27 per share, will be exercisable beginning on the effective date of stockholder approval of the issuance of the shares issuable upon exercise of the warrants and expire five years from the effective date of stockholder approval.

Company insiders, including the Company's Chief Executive Officer, Chief Financial Officer and certain members of the Company's board of directors, participated in the offering. The purchase price per share of common stock (or per pre-funded warrant in lieu thereof) and accompanying warrant for these Company insiders was the same purchase price as paid by other investors in the offering.

H.C. Wainwright & Co. acted as the exclusive placement agent for the offering.

The net proceeds from this offering, together with the Company's cash on hand are expected to fund its operations into the third quarter of 2025. The Company intends to use the net proceeds from the offering for general corporate purposes which includes, without limitation, ongoing research and pre-clinical studies, clinical trials, the development of new biological and pharmaceutical technologies, investing in or acquiring companies that are synergistic with or complementary to the Company's technologies, licensing activities related to the Company's current and future product candidates, and to the development of emerging technologies, investing in or acquiring companies that are developing emerging technologies, licensing activities, or the acquisition of other businesses and working capital.

The securities described above were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and/or Regulation D promulgated thereunder and, along with the shares of common stock underlying the warrants, have not been registered under the Securities Act, or applicable state securities laws. Accordingly, the shares, warrants and underlying shares of common stock may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. Pursuant to a registration rights agreement with investors, the Company has agreed to file a resale registration statement covering the securities described above.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Dermata Therapeutics
Dermata Therapeutics is a late-stage biotechnology company focusing on the treatment of medical and aesthetic skin diseases and conditions. Dermata's lead product candidate, Xyngari™ (formerly DMT310), is its first product candidate being developed from its Spongilla technology platform. Xyngari™ is a once-weekly, topical product candidate derived from a naturally sourced freshwater sponge with multiple unique mechanisms of action. In addition to acne, Xyngari™ has been studied for the treatment of psoriasis and rosacea. Dermata's second program, uses Xyngari™ as a new method for needle-free intradermal delivery of botulinum toxin for the treatment of multiple aesthetic and medical skin diseases and conditions. Dermata is headquartered in San Diego, California. For more information, please visit http://www.dermatarx.com/.

Forward-looking Statements
Statements in this press release that are not strictly historical in nature are forward-looking statements. These statements are based on the Company's current beliefs and expectations and new risks may emerge from time to time. Forward-looking statements are subject to known and unknown risks, uncertainties, assumptions, and other factors including, but are not limited to, statements related to: the intended use of proceeds from the offering and the amount of time it will fund operations; the receipt of stockholder approval; the potential development and commercialization of product candidates; the ability of the Company's product candidates to achieve applicable endpoints in clinical trials; whether the results of the Company's product candidates will lead to future product development; and whether the Company will have the ability to obtain adequate funding for future development of its product candidates. These statements are only predictions based on current information and expectations and involve a number of risks and uncertainties, including but not limited to, market and other conditions. Actual events or results may differ materially from those projected in any of such statements due to various factors, including the risks and uncertainties inherent in drug development, approval, and commercialization, and the fact that past results of clinical trials may not be indicative of future trial results. For a discussion of these and other factors, please refer to Dermata's filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. This caution is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are qualified in their entirety by this cautionary statement and Dermata undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof, except as required by law.

Investors:
Cliff Mastricola
Investor Relations
cmastricola@dermatarx.com

SOURCE: Dermata Therapeutics

View the original press release on accesswire.com

FAQ

How much did Dermata Therapeutics (DRMA) raise in its January 2024 private placement?

Dermata Therapeutics raised $2.55 million in gross proceeds through the private placement offering.

What was the pricing of DRMA's private placement shares and warrants?

The shares and warrants were priced at $1.27 per share, with warrants exercisable at the same price.

How long will the funding from DRMA's private placement last?

The net proceeds, combined with existing cash, are expected to fund operations into the third quarter of 2025.

Did Dermata (DRMA) insiders participate in the private placement?

Yes, company insiders including the CEO, CFO, and certain board members participated in the offering at the same price as other investors.

What is the expiration timeline for DRMA's new warrants?

The warrants will expire five years from the effective date of stockholder approval.