Hepion Pharmaceuticals Announces Exercise of Warrants for Approximately $2.0 Million Aggregate Gross Proceeds
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Insights
Hepion Pharmaceuticals' recent definitive agreement with an institutional investor to exercise a Series B common stock purchase warrant for approximately $2.0 million is a strategic financial move. By amending the exercise price from $4.85 to $2.10 per share, the company has incentivized the warrant exercise, which is a common practice to raise funds without the immediate dilution that comes with issuing new equity at market price. However, the issuance of additional warrants at an exercise price of $1.91 could imply a future dilution of shares, potentially affecting the stock's value. Investors should monitor the balance between the company's capital needs and the potential impact of increased shares on the market.
The transaction's expected closure by February 21, 2024, indicates an urgency in securing funds, which might be necessary for the company's general corporate purposes. The involvement of A.G.P./Alliance Global Partners as the financial advisor adds credibility to the transaction. Nonetheless, the critical aspect for investors to watch would be the company's subsequent use of the proceeds and whether it translates into tangible progress in drug development or leads to an increase in operational efficiency.
The new warrants offered in a private placement under an exemption from the registration requirements of the Securities Act of 1933 are a significant legal structuring choice. This approach allows Hepion to raise capital swiftly without the regulatory delays associated with public offerings. However, the company's commitment to file a registration statement with the SEC for the resale of shares issuable upon exercise of the new warrants demonstrates compliance with securities laws and provides a pathway for the investor to eventually liquidate their position.
It's essential to recognize that the adjustment of the October 2023 Series A common stock purchase warrant's terms, specifically the reduction in exercise price and extension of the expiration date, is a negotiation that benefits the warrant holder. This amendment could indicate the company's need to maintain favorable relations with its investors, possibly due to the competitive nature of the biopharmaceutical industry and the high costs associated with drug development.
From a market perspective, Hepion Pharmaceuticals' focus on NASH, HCC and other chronic diseases positions it within a high-growth potential sector. The market for NASH treatments alone is projected to grow significantly as prevalence increases. The capital raised through this transaction could therefore be viewed as a strategic investment in the company's pipeline, which, if successful, may lead to substantial future returns. However, the revised exercise price of the warrants reflects a market sentiment that may not fully align with the company's internal valuations, possibly due to the inherent risks of clinical-stage development.
Investors should also consider the timing of this transaction in relation to Hepion's development milestones. If the funding aligns with upcoming trial results or other critical research phases, the company may be positioning itself for rapid advancement upon successful outcomes. Conversely, if the funding is primarily aimed at sustaining operations without clear progression, it could signal underlying financial stress.
EDISON, N.J., Feb. 16, 2024 (GLOBE NEWSWIRE) -- Hepion Pharmaceuticals, Inc. (NASDAQ:HEPA), a clinical stage biopharmaceutical company focused on artificial intelligence assisted therapeutic drug development for the treatment of non-alcoholic steatohepatitis (“NASH”), fibrotic diseases, hepatocellular carcinoma (“HCC”), and other chronic diseases, today announced that it has entered into a definitive agreement for the immediate exercise of an outstanding Series B common stock purchase warrant held by an institutional investor to purchase an aggregate of 980,393 shares of Hepion common stock for gross proceeds to the Company of approximately
As part of this transaction, the investor agreed to exercise the existing Series B common stock purchase warrant (which was originally issued in October 2023 and had an exercise price of
In consideration for the immediate exercise of the existing warrant for cash, Hepion has agreed to issue to the investor two new unregistered warrants, each to purchase 735,295 shares of common stock (or an aggregate of 1,470,590 shares) at an exercise price of
A.G.P./Alliance Global Partners is acting as the exclusive financial advisor in connection with the offering.
The transaction is expected to close no later than February 21, 2024, subject to satisfaction of customary closing conditions. Hepion intends to use the net proceeds from the exercise for general corporate purposes.
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 “Securities Act”), and, along with the shares of common stock issuable upon their exercise, have not been registered under the Securities Act or applicable state securities laws, and 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. The Company has agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) covering the resale of the shares of common stock issuable upon exercise of the new warrants.
In connection with the offering, the Company agreed to amend, effective upon the closing of this offering, the terms of the October 2023 Series A common stock purchase warrant held by a purchaser in the offering to reduce the exercise price thereof to
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 Hepion Pharmaceuticals
Hepion’s lead drug candidate, rencofilstat, is a potent inhibitor of cyclophilins, which are involved in many disease processes. Rencofilstat has been shown to reduce liver fibrosis and hepatocellular carcinoma tumor burden in experimental disease models and is currently in Phase 2 clinical development for the treatment of NASH. In November 2021, the U.S. Food and Drug Administration (“FDA”) granted Fast Track designation for rencofilstat for the treatment of NASH. That was followed in June 2022 by the FDA’s granting of Orphan Drug designation to rencofilstat for the treatment of HCC.
Hepion has created a proprietary artificial intelligence deep machine learning (“AI/ML”) platform designed to better understand disease processes and identify patients that are rencofilstat responders. This AI/ML has the potential to shorten development timelines and increase the observable differences between placebo and treatment groups. In addition, Hepion’s AI/ML can be used to drive its ongoing NASH and HCC clinical development programs and identify other potential therapeutic indications for cyclophilin inhibition with rencofilstat.
Forward-Looking Statements
Certain statements in this press release are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words such as “anticipate,” “believe,” “forecast,” “estimated,” and “intend,” among others. These forward-looking statements are based on Hepion Pharmaceuticals’ current expectations and actual results could differ materially. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, substantial competition; our ability to continue as a going concern; our need for additional financing; uncertainties of patent protection and litigation; risks associated with delays, increased costs and funding shortages caused by the COVID-19 pandemic; uncertainties with respect to lengthy and expensive clinical trials, that results of earlier studies and trials may not be predictive of future trial results; uncertainties of government or third party payer reimbursement; limited sales and marketing efforts and dependence upon third parties; and risks related to failure to obtain FDA clearances or approvals and noncompliance with FDA regulations. As with any drug candidates under development, there are significant risks in the development, regulatory approval, and commercialization of new products. There are no guarantees that future clinical trials discussed in this press release will be completed or successful, or that any product will receive regulatory approval for any indication or prove to be commercially successful. Hepion Pharmaceuticals does not undertake an obligation to update or revise any forward-looking statement. Investors should read the risk factors set forth in Hepion Pharmaceuticals’ Form 10-K for the year ended December 31, 2022, and other periodic reports filed with the SEC.
For further information, please contact:
John Cavan
Hepion Pharmaceuticals
jcavan@hepionpharma.com
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