FibroBiologics Closes Second $5 Million Tranche of $25 Million Financing

Rhea-AI Summary

FibroBiologics (NASDAQ: FBLG) has closed the second $5 million tranche of its previously announced $25 million Standby Equity Purchase Agreement (SEPA) with Yorkville Advisors. The agreement allows FibroBiologics to sell up to $25 million of common stock over two years, with the first $15 million being advanced in three equal tranches via convertible promissory notes.

The first $5 million tranche was funded upon SEPA entry, and the second $5 million followed the filing of a registration statement. The third $5 million will be funded after registration statement effectiveness and Nasdaq-required shareholder approval. An additional $10 million can be sold subject to Yorkville's consent while the notes remain outstanding.

Positive

• Secured second $5 million tranche of financing
• Total financing potential of $25 million over two years
• Additional $10 million available subject to conditions

Negative

• Dilutive impact on shareholders due to convertible notes and stock issuance
• Third tranche contingent on shareholder approval
• Additional $10 million subject to Yorkville's discretion

Insights

Financial Analyst

The second $5 million tranche completion represents a important milestone in FibroBiologics' $25 million financing strategy through the Standby Equity Purchase Agreement (SEPA). The structured financing approach, with $15 million divided into three equal tranches, demonstrates sophisticated capital management. With two tranches ($10 million) now secured, the company has strengthened its financial position.

The convertible note structure provides flexibility but could lead to potential dilution for existing shareholders. The additional $10 million available subject to Yorkville's consent creates a safety net for future capital needs. For a company with a market cap of $79.4 million, this financing represents approximately 31.5% of its current valuation, indicating a significant capital injection relative to size.

The involvement of Yorkville Advisors, a reputable investment fund, adds credibility to the deal. The requirement for shareholder approval and Nasdaq compliance for the third tranche shows proper corporate governance and regulatory adherence. The staged release of funds helps manage risk while ensuring steady capital availability for operational needs.

Biotech Industry Analyst

This financing strengthens FibroBiologics' position in the competitive biotechnology landscape. With 160+ patents issued and pending, the capital injection will be important for advancing their fibroblast-based therapeutics pipeline. The company's focus on chronic diseases represents a substantial market opportunity and this funding provides runway for clinical development programs.

The structured nature of the financing, with registration statement requirements and shareholder approval mechanisms, indicates a well-thought-out approach to capital raising while maintaining compliance with securities regulations. The general corporate purposes designation for fund usage provides operational flexibility, essential for a clinical-stage biotech company managing multiple research and development programs.

HOUSTON, Dec. 30, 2024 (GLOBE NEWSWIRE) -- FibroBiologics, Inc. (Nasdaq: FBLG) ("FibroBiologics”), a clinical-stage biotechnology company with 160+ patents issued and pending with a focus on the development of therapeutics and potential cures for chronic diseases using fibroblasts and fibroblast-derived materials, announced that it has closed the second $5 million tranche of the previously announced Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD. (“Yorkville”), an investment fund managed by Yorkville Advisors Global, LP. The agreement allows FibroBiologics, subject to customary conditions, to sell up to $25 million in the aggregate of its common stock to Yorkville over the course of two years.

Yorkville agreed to advance to FibroBiologics the first $15 million available under the SEPA in three equal tranches to be evidenced by convertible promissory notes. The first tranche in the amount of $5 million was funded upon entry into the SEPA and the second tranche of $5 million was funded after the filing of a registration statement covering the resale of the shares issuable to Yorkville under the promissory notes. The third tranche of $5 million will fund following the effectiveness of the registration statement and receipt of shareholder approval in satisfaction of Nasdaq rules. FibroBiologics can sell an additional $10 million of its common stock to Yorkville, subject to Yorkville’s consent and other conditions, while the convertible promissory notes remain outstanding.

The net proceeds of the financing are expected to be used for general corporate purposes.

For more information, please visit FibroBiologics' website or email FibroBiologics at: info@fibrobiologics.com. For more information on the SEPA, including important terms and conditions, please see FibroBiologics' filings with the Securities and Exchange Commission, including its Current Reports on Form 8-K filed with the Securities and Exchange Commission from time to time.

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

D. Boral Capital LLC acted as the exclusive placement agent in connection with the SEPA.

Cautionary Statement Regarding Forward-Looking Statements

This communication contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning the funding of the advances under the SEPA, FibroBiologics’ ability to sell additional shares under the SEPA, and FibroBiologics’ ability to complete clinical trials and IND-enabling studies and to develop its other programs and indications. These forward-looking statements are based on FibroBiologics' management's current expectations, estimates, projections and beliefs, as well as a number of assumptions concerning future events. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside FibroBiologics' management's control, that could cause actual results to differ materially from the results discussed in the forward-looking statements, including those set forth under the caption "Risk Factors" and elsewhere in FibroBiologics' annual, quarterly and current reports (i.e., Form 10-K, Form 10-Q and Form 8-K) as filed or furnished with the SEC and any subsequent public filings. Copies are available on the SEC's website, www.sec.gov. These risks, uncertainties, assumptions and other important factors include, but are not limited to: (a) risks related to FibroBiologics' liquidity and its ability to maintain capital resources sufficient to conduct its business; (b) expectations regarding the initiation, progress and expected results of our R&D efforts and preclinical studies; (c) the unpredictable relationship between R&D and preclinical results and clinical study results; and (d) the ability of FibroBiologics to satisfy the conditions under the SEPA and related agreements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and FibroBiologics assumes no obligation and, except as required by law, does not intend to update, or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. FibroBiologics gives no assurance that it will achieve its expectations.

About FibroBiologics

Based in Houston, FibroBiologics is a clinical-stage biotechnology company developing a pipeline of treatments and potential cures for chronic diseases using fibroblast cells and fibroblast-derived materials. FibroBiologics holds 160+ US and internationally issued patents/patents pending across various clinical pathways, including disc degeneration, orthopedics, multiple sclerosis, psoriasis, wound healing, reversing organ involution, and cancer. FibroBiologics represents the next generation of medical advancement in cell therapy. For more information, visit www.FibroBiologics.com.

General Inquiries:
info@fibrobiologics.com

Investor Relations:
Nic Johnson
Russo Partners
(212) 845-4242
fibrobiologicsIR@russopr.com

Media Contact:
Liz Phillips
Russo Partners
(347) 956-7697
Elizabeth.phillips@russopartnersllc.com

FAQ

What is the total value of FibroBiologics (FBLG) SEPA agreement with Yorkville?

The total value of the SEPA agreement is $25 million, to be sold over a two-year period.

How much has FibroBiologics (FBLG) received so far from the Yorkville SEPA?

FibroBiologics has received $10 million so far, consisting of two $5 million tranches.

What conditions must FBLG meet to receive the third $5 million tranche?

FBLG must obtain shareholder approval to satisfy Nasdaq rules and achieve effectiveness of the registration statement.

How will FibroBiologics use the proceeds from the Yorkville SEPA financing?

The net proceeds will be used for general corporate purposes.

What is the structure of the initial $15 million funding under the FBLG-Yorkville agreement?

The initial $15 million is being advanced in three equal tranches of $5 million each, evidenced by convertible promissory notes.