Entero Therapeutics Announces Exercise of Warrants and Issuance of New Warrants in a Private Placement for $1.9 Million Gross Proceeds

Rhea-AI Summary

Entero Therapeutics has announced agreements with holders of its existing warrants, allowing them to exercise their warrants at a reduced price of $1.09 per share. This exercise is expected to yield approximately $1.9 million in gross proceeds. In return, these holders will receive new warrants to purchase additional shares at the same price, exercisable for five years after stockholder approval. The transaction, conducted as an at-market deal under Nasdaq rules, involves issuing new warrants for up to 3,525,348 shares. Roth Capital Partners served as the financial advisor for this transaction.

Positive

• Entero Therapeutics expects to raise approximately $1.9 million in gross proceeds from the exercise of existing warrants.
• New warrants will be issued for up to 3,525,348 shares of common stock, providing potential future inflow.

Negative

• The reduced exercise price of $1.09 per share might indicate a lower valuation.
• Issuance of new warrants could dilute existing shareholders' equity.

Insights

Financial Analyst

Entero Therapeutics' latest announcement regarding the exercise of warrants and issuance of new warrants in a private placement brings in $1.9 million in gross proceeds. This move could be interpreted as a short-term liquidity boost for the company. The reduction in the exercise price to $1.09 may indicate a desire to quickly capitalize on warrant exercises, perhaps suggesting a pressing need for funds.

The issuance of new warrants with a five-year term might dilute the stock when exercised, potentially affecting existing shareholders. However, for a clinical-stage company, acquiring immediate cash is often critical to sustain operations and continue research. Additionally, Roth Capital Partners' involvement adds a layer of credibility to this financial maneuver.

For investors, the immediate cash influx is positive, but the looming dilution risk needs to be considered. The company’s ability to effectively use these funds to advance its clinical trials and move closer to commercialization will be important in determining the long-term impact of this transaction.

Market Research Analyst

Understanding the market impact of Entero Therapeutics' private placement is essential. The reduced exercise price and new warrant issuance show management’s strategic move to incentivize existing warrant holders. Given the at-market transaction under Nasdaq rules, it's essential to see this as an attempt to reinforce investor confidence while ensuring immediate capital.

However, the approval requirement from stockholders before new warrants become exercisable adds a layer of uncertainty. Market sentiment will depend on how this news aligns with Entero's broader strategic goals, particularly advancements in their gastrointestinal disease therapies. The company's ability to execute on its clinical milestones will directly influence market perception.

Retail investors should keep an eye on upcoming announcements regarding stockholder meetings and clinical progress, which will likely sway market sentiment more than this short-term funding event.

BOCA RATON, Fla., July 11, 2024 (GLOBE NEWSWIRE) -- Entero Therapeutics, Inc. (“Entero” or the “Company”) (NASDAQ: ENTO), a clinical-stage biopharmaceutical company specializing in the development of targeted, non-systemic therapies for gastrointestinal (GI) diseases, today announced it has entered into agreements with certain holders of its existing warrants exercisable for 1,762,674 shares of its common stock, in the aggregate, to exercise their warrants at a reduced exercise price of $1.09 per share, in exchange for new warrants as described below. The aggregate gross proceeds from the exercise of the existing warrants is expected to total approximately $1,921,315, before deducting financial advisory fees. The reduction in the exercise price of the existing warrants and the issuance of the new warrants was structured as an at-market transaction under Nasdaq rules.  

Roth Capital Partners is acting as the Company’s financial advisor for this transaction.

The shares of common stock issuable upon exercise of the existing warrants are registered for resale pursuant to a resale registration statement on Form S-3 (File No. 333-276429) which was declared by the Securities and Exchange Commission (SEC) on January 17, 2024.

In consideration for the immediate exercise of the existing warrants for cash, the exercising holders will receive new warrants to purchase shares of common stock in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”). The new warrants will be exercisable, subject to the receipt of stockholder approval, into an aggregate of up to 3,525,348 shares of common stock, at an exercise price of $1.09 per share and have a term of exercise equal to five years from the date of stockholder approval. The securities offered in the private placement have not been registered under the Securities Act of 1933, as amended, or applicable under state securities laws. Accordingly, the securities 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. As part of the transaction, the Company has agreed to file a resale registration statement on Form S-3 with the Securities and Exchange Commission within 15 days of the closing to register the resale of the shares of common stock underlying the new warrants issued in the private placement.

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

About Entero Therapeutics, Inc.

Entero is a clinical-stage biopharmaceutical company specializing in the development of targeted, non-systemic therapies for gastrointestinal (GI) diseases. The Company is currently advancing a therapeutic development pipeline with multiple late-stage clinical programs primarily built around three proprietary technologies: latiglutenase, a Phase 3-ready, potentially first-in-class, targeted, oral biotherapeutic for Celiac disease; capeserod, a selective 5-HT4 receptor partial agonist being developed for gastroparesis; and adrulipase, a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients in cystic fibrosis and chronic pancreatitis patients with exocrine pancreatic insufficiency. Entero is headquartered in Boca Raton, Florida. For more information visit www.enterothera.com.

Forward-Looking Statement

This press release may contain certain statements relating to future results which are forward-looking statements. It is possible that the Company’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements, depending on factors including whether any financing or licensing transaction may be completed, completed with different terms, in an untimely manner, or not at all; whether the Company will be able to realize the expected benefits of its acquisition of  ImmunogenX; the Company’s ability to integrate the assets and contemplated commercial operations acquired from ImmunogenX into the Company’s  business; whether results obtained in preclinical and nonclinical studies and clinical trials will be indicative of results obtained in future clinical trials; whether preliminary or interim results from a clinical trial will be indicative of the final results of the trial; whether the Company will be able to maintain compliance with Nasdaq’s applicable listing criteria and the effect of a delisting from Nasdaq on the market for the Company’s securities; the size of the potential markets for the Company’s drug candidates and its ability to service those markets; the effects of the First Wave Bio, Inc. acquisition, the related settlement and their effect on the Company’s business, operating results and financial prospects; and the Company’s current and future capital requirements and its ability to raise additional funds to satisfy its capital needs. Additional information concerning the Company and its business, including a discussion of factors that could materially affect the Company’s financial results are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, under the heading “Risk Factors,” as well as the Company’s subsequent filings with the Securities and Exchange Commission. All forward-looking statements included in this press release are made only as of the date of this press release, and we do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or of which we hereafter become aware.

For more information:
Entero Therapeutics, Inc.
777 Yamato Road, Suite 502
Boca Raton, FL 33431
Phone: (561) 589-7020
info@enterothera.com

Media contact:
Russo Partners

David Schull or Liz Phillips
(347) 956-7697
david.schull@russopartnersllc.com
elizabeth.phillips@russopartnersllc.com

FAQ

What is the expected gross proceeds from Entero Therapeutics' recent private placement?

Entero Therapeutics expects to raise approximately $1.9 million in gross proceeds.

What is the reduced exercise price for the existing warrants of Entero Therapeutics?

The reduced exercise price for the existing warrants is $1.09 per share.

What will the new warrants issued by Entero Therapeutics allow holders to do?

The new warrants will allow holders to purchase additional shares at an exercise price of $1.09 per share, exercisable for five years post stockholder approval.

How many new shares could be potentially issued through Entero Therapeutics' new warrants?

Up to 3,525,348 new shares could be issued through the new warrants.

Who acted as the financial advisor for Entero Therapeutics' recent transaction?

Roth Capital Partners acted as the financial advisor for this transaction.