Dermata Therapeutics Announces Exercise of Warrants for $2.66 Million in Gross Proceeds Priced At-the-Market Under Nasdaq Rules
Dermata Therapeutics announced the exercise of warrants, resulting in approximately $2.66 million in gross proceeds. The warrants were priced at $5.16 per share, a reduction from their original prices of $9.7665 and $32.40. This transaction involved a total of 516,336 shares of the company's common stock. The closing of this offering is expected around May 21, 2024, pending customary conditions.
In exchange, Dermata will issue new Series A and Series B warrants, exercisable immediately and with different terms. Series A warrants cover 601,174 shares, priced at $4.91 per share, and have a term of five and a half years. Series B warrants cover 431,498 shares, with a two-year term.
The proceeds will fund general corporate purposes including ongoing research, clinical trials, and potential acquisitions. H.C. Wainwright & Co. acted as the exclusive placement agent for this offering.
- Dermata raised $2.66 million in gross proceeds from warrant exercises.
- Warrants were exercised at a reduced price of $5.16 per share, making them more attractive to investors.
- New Series A and B warrants provide potential for future funding, with exercise prices of $4.91 per share.
- Proceeds aimed at supporting diverse corporate activities, indicating ongoing and potential new projects.
- Reduced exercise price from $9.7665 and $32.40 to $5.16 per share may indicate prior overvaluation.
- Issuing new warrants dilutes existing shareholders' equity.
- High placement agent fees and offering expenses reduce net proceeds from the gross $2.66 million.
- Dependence on future warrant exercises for funding can introduce financial uncertainty.
Insights
Dermata Therapeutics' announcement regarding the exercise of warrants resulting in
From a financial perspective, the immediate infusion of capital bolsters Dermata's liquidity position, which is critical for a biotechnology firm engaged in expensive and uncertain clinical trials. The issuance of new Series A and B warrants, with exercise prices set slightly below the current levels, indicates a balanced approach to future funding requirements while not overly diluting existing shareholders in the short term.
However, the market might view the move to lower the exercise price as a sign of potential difficulty in meeting cash flow needs at the previously higher strike prices, which could raise concerns about the company's projected cash burn rate and the risks associated with its clinical trial outcomes. Retail investors should be cautious and consider both the immediate benefit of increased capital and the potential signaling effect of reduced exercise prices on the company's financial health.
From a market dynamics perspective, Dermata's warrant exercise strategy highlights a common method employed by biotechnology companies to raise capital without issuing additional equity outright. This approach can be less dilutive and more strategic, as it ties the capital raising directly to investor confidence in the company's future prospects.
The involvement of H.C. Wainwright & Co. as the exclusive placement agent is significant. This firm is well-known for its specialization in the biotech sector, which might positively influence investor sentiment and provide credibility to the transaction. The issuance of new unregistered Series A and B warrants, with extended terms and immediately exercisable features, strategically aligns with maintaining investor engagement and ensuring continuous capital availability.
However, the frequent use of these financial instruments can sometimes signal that the company might face challenging market conditions in securing traditional financing. Investors should weigh this against the potential upside of successful clinical trials and the development of new technologies.
In the context of biotechnology, capital raises through warrant exercises are essential to sustain costly research and development activities. Dermata's intention to use the proceeds for general corporate purposes, which includes clinical trials and new biological and pharmaceutical technologies, is a strategic move.
Given that Dermata is in a late-stage development phase, the funds will likely support activities that are critical to advancing their product pipeline towards potential commercialization. The fact that the company is issuing new warrants with long durations, particularly the Series A warrants with a term of five and a half years, indicates confidence in their ongoing and future projects. This extended time horizon provides substantial flexibility in terms of financial planning and execution of their research programs.
Nevertheless, investors should consider the inherent risks associated with late-stage biotech firms, including the possibility of clinical trial failures and regulatory hurdles. While this capital raise is a positive step, success in the biotech field is far from guaranteed and the long-term viability will depend heavily on forthcoming clinical trial results and subsequent regulatory approvals.
SAN DIEGO, CA / ACCESSWIRE / May 17, 2024 / 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 entry into definitive agreements for the immediate exercise of certain outstanding warrants to purchase up to an aggregate of 516,336 shares of the Company's common stock, having exercise prices of
H.C. Wainwright & Co. is acting as the exclusive placement agent for the offering.
In consideration for the immediate exercise of the warrants for cash, Dermata will issue new unregistered Series A warrants to purchase up to 601,174 shares of common stock and new Series B warrants to purchase up to 431,498 shares of common stock. The new warrants will have an exercise price of
The gross proceeds to Dermata from the exercise of the warrants are expected to be approximately
The new warrants described above were offered in a private placement pursuant to an applicable exemption from the registration requirements of the Securities Act of 1933, as amended (the "1933 Act"), and, along with the shares of common stock issuable upon exercise, have not been registered under the 1933 Act, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission ("SEC") or an applicable exemption from such registration requirements. Dermata has agreed to file a registration statement with the SEC covering the resale of the shares of common stock issuable upon exercise of the new warrants.
This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities in this offering, 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, Inc. is a late-stage biotechnology company focusing on the treatment of medical and aesthetic skin diseases and conditions. The Company's lead product candidate, DMT310, is the Company's first product candidate being developed from its Spongilla technology platform and is currently being evaluated in a Phase 3 program. DMT310 is a once-weekly topical product candidate derived from a naturally sourced freshwater sponge with multiple unique mechanisms of action. DMT310 has been studied for the treatment of acne, rosacea, and psoriasis. The Company's second product candidate, DMT410, uses its Spongilla technology as a new method for topical intradermal delivery of botulinum toxin for the treatment of hyperhidrosis and multiple aesthetic skin 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 timing and completion of the offering; the satisfaction of customary closing conditions related to the offering and the intended use of proceeds therefrom; expectations with regard to the timing of meetings and/or responses from submissions with regulatory bodies; expectations with regard to the timing of submission of an NDA; the uncertainties inherent in clinical trials including enrolling an adequate number of patients on time or be completed on schedule, if at all; timing and ability to generate clinical data; expectations with regard to any potential partnership opportunities for any of the Company's product candidates; the Company's expectations with regard to current cash and cash equivalents and the amount of time it will fund operations; the success, cost, and timing of its product candidates DMT310 and DMT410 development activities and ongoing and planned clinical trials; and whether the results of any ongoing or planned clinical trials of DMT310 or DMT410 will lead to future product development. 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:
Sean Proehl
Associate General Counsel
info@dermatarx.com
SOURCE: Dermata Therapeutics
View the original press release on accesswire.com
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