Inhibikase Therapeutics Announces Pricing of Registered Direct Offering and Warrant Inducement, Priced At-The-Market for Aggregate Gross Proceeds of $4.0 Million

Rhea-AI Summary

Inhibikase Therapeutics announced a registered direct offering and warrant inducement, totaling gross proceeds of $4.0 million. The agreement includes 1,672,452 shares of common stock or pre-funded warrants, and corresponding Series A and B warrants for the same amount, all priced at $1.68 per share. Additionally, the company has amended the exercise price for outstanding warrants from January 2023 to $1.68, resulting in the immediate exercise of 708,500 shares and issuance of new Series C and D warrants. The proceeds are before placement agent fees and are expected to close by May 22, 2024.

Positive

• Raised $4.0 million in gross proceeds before fees.
• Successful agreement with a single institutional investor.
• Warrants exercise price set uniformly at $1.68 per share.
• Warrants Series A and C have a one-year expiration, encouraging short-term action.
• Warrants Series B and D have a five-year expiration, offering long-term investment potential.

Negative

• Issuing additional shares and warrants could lead to shareholder dilution.
• The offering is subject to customary closing conditions, introducing potential risks.
• Fees and other offering expenses will reduce the net proceeds.
• The company has amended its existing warrants, potentially indicating prior inefficiencies in their investment strategy.

Insights

Financial Analyst

Inhibikase Therapeutics has announced a $4.0 million fundraising through a complex structure of direct offerings and warrants. For retail investors, it’s essential to understand the financial implications of this move.

Firstly, this infusion of $4.0 million will bolster the company’s cash reserves, which is critical for a clinical-stage pharmaceutical company. Such companies often operate at a loss due to ongoing research and development costs. This capital can be important for funding upcoming clinical trials or extending operational runway.

The offering price of $1.68 per share represents an at-the-market valuation, indicating that the company is confident in its current valuation and doesn’t feel the need to price the offering at a discount to attract investors. However, the issuance of Series A and Series B warrants, exercisable at the same price, could potentially dilute existing shareholders if exercised. Warrants give investors the right to purchase additional shares at a set price, which could lead to an increase in outstanding shares and potential dilution of existing equity.

Investors should also pay attention to the warrant inducement agreement. The agreement to exercise outstanding warrants to purchase 708,500 shares shows a commitment from the investor, which may be seen as a vote of confidence in the company’s future. However, the amendment of exercise prices and additional issuance of Series C and Series D warrants further complicates the capital structure and could be a concern for those wary of dilution.

Short-term, this capital raise should be viewed positively as it secures funds necessary for the company's immediate needs. Long-term, the impact on share value will depend on how effectively Inhibikase uses these funds to advance its pipeline and achieve milestones that can drive growth and valuation.

Market Research Analyst

The news of Inhibikase Therapeutics’ direct offering and resulting $4.0 million in proceeds provides several layers of insights for retail investors, particularly those interested in the biotech sector.

Inhibikase Therapeutics is focusing on treatments for Parkinson's disease and related disorders, a market with substantial unmet needs. By 2028, the Parkinson’s disease treatment market is projected to reach $8.3 billion. This fundraising, therefore, aligns well with the company’s strategic goals as it allows for continued investment in their research and development pipeline.

From a market perspective, the issuance of warrants can be double-edged. While they could dilute shares if exercised, they also indicate a structured mechanism for future capital infusions, providing financial flexibility. For investors, this implies that the company plans to secure sustained funds without taking on debt, which is positive in reducing financial risk. However, market sentiment typically reacts cautiously to dilution risks, so short-term stock price volatility could be expected.

The move to price the shares at-the-market is a positive signal, reflecting management's confidence in current market valuations. The involvement of Maxim Group LLC as the sole placement agent also underlines the credibility and support from established financial institutions.

In summary, while dilution remains a concern, the strategic acquisition of funds indicates robust management planning and aligns with long-term growth trajectories in the biotech sector. Retail investors should weigh these factors and consider the broader market dynamics when assessing the potential impact on their portfolios.

BOSTON and ATLANTA, May 20, 2024 (GLOBE NEWSWIRE) -- Inhibikase Therapeutics, Inc. (Nasdaq: IKT) (“Inhibikase” or “Company”), a clinical-stage pharmaceutical company developing protein kinase inhibitor therapeutics to modify the course of Parkinson's disease, Parkinson's-related disorders and other diseases of the Abelson Tyrosine Kinases, today announced that it has entered into a securities purchase agreement with a single institutional investor to purchase 1,672,452 shares of common stock (or pre-funded warrants in lieu thereof) in a registered direct offering priced at-the-market under Nasdaq rules. In a concurrent private placement, the Company also agreed to issue unregistered Series A warrants to purchase up to an aggregate of 1,672,452 shares of common stock, and unregistered Class B warrants to purchase up to an aggregate of 1,672,452 shares of common stock. Each share of common stock (or pre-funded warrant in lieu thereof) is being sold with one Series A warrant to purchase one share of common stock and one Series B warrant to purchase one share of common stock at a combined purchase price of $1.68. The Series A and Series B warrants will each have an exercise price of $1.68 per share, will be exercisable beginning on the effective date of stockholder approval and, in the case of Series A warrants, will expire on the one-year anniversary from the date of stockholder approval, and in the case of Series B warrants, will expire on the five-year anniversary from the date of stockholder approval.

The Company has also entered into a warrant inducement agreement with the investor to exercise certain outstanding warrants that the Company issued in January 2023. Pursuant to the warrant inducement agreement, the investor has agreed to exercise outstanding warrants to purchase an aggregate of 708,500 shares of the company's common stock at an amended exercise price of $1.68. In consideration for the immediate exercise of the warrants, the Company also agreed to reduce the exercise price of the remaining unexercised portion of such warrants to purchase 1,229,484 shares of common stock to $1.68, and to issue the investor unregistered Series C warrants to purchase an aggregate of 708,500 shares of the Company's common stock, and Series D warrants to purchase an aggregate of 708,500 shares of the Company’s common stock. The Series C and Series D warrants will each have an exercise price of $1.68 per share, will be exercisable beginning on the effective date of stockholder approval and, in the case of Series C warrants, will expire on the one-year anniversary from the date of stockholder approval, and in the case of Series D warrants, will expire on the five-year anniversary from the date of stockholder approval.

The gross proceeds to the Company from the registered direct offering, concurrent private placement and warrant inducement are estimated to be approximately $4.0 million before deducting the placement agent’s fees and other estimated offering expenses payable by the Company. The offering is expected to close on or about May 22, 2024, subject to the satisfaction of customary closing conditions.

Maxim Group LLC is acting as the sole placement agent in connection with the offering.

The shares of common stock (or pre-funded warrants in lieu thereof) are being offered pursuant to a shelf registration statement on Form S-3 (File No. 333-262551), which was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on February 11, 2022. The warrants to be issued in the concurrent private placement and the shares issuable upon exercise of such warrants were offered pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) under Section 4(a)(2) thereof and Regulation D promulgated thereunder and have not been registered under the Act or applicable state securities laws.

This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sales of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. A prospectus supplement relating to the shares of common stock and pre-funded warrants will be filed by the Company with the SEC. When available, copies of the prospectus supplement relating to the registered direct offering, together with the accompanying prospectus, can be obtained at the SEC's website at www.sec.gov or from Maxim Group LLC, 300 Park Avenue, New York, NY 10022, Attention: Syndicate Department, or via email at syndicate@maximgrp.com or telephone at (212) 895-3500.

About Inhibikase (www.inhibikase.com)

Inhibikase Therapeutics, Inc. (Nasdaq: IKT) is a clinical-stage pharmaceutical company developing therapeutics for Parkinson's disease and related disorders. Inhibikase's multi-therapeutic pipeline has a primary focus on neurodegeneration and its lead program risvodetinib, an Abelson Tyrosine Kinase (c-Abl) inhibitor, targets the treatment of Parkinson's disease inside and outside the brain as well as other diseases that arise from Abelson Tyrosine Kinases. Its multi-therapeutic pipeline is pursuing Parkinson's-related disorders of the brain and GI tract, orphan indications related to Parkinson's disease such as Multiple System Atrophy, and drug delivery technologies for kinase inhibitors such as IkT-001Pro, a prodrug of the anticancer agent imatinib mesylate that the Company believes will provide a better patient experience with fewer on-dosing side-effects. The Company's RAMP™ medicinal chemistry program has identified several follow-on compounds to risvodetinib that could potentially be applied to other cognitive and motor function diseases of the brain. Inhibikase is headquartered in Atlanta, Georgia with offices in Lexington, Massachusetts.

Social Media Disclaimer

Investors and others should note that the Company announces material financial information to investors using its investor relations website, press releases, SEC filings and public conference calls and webcasts. The Company intends to also use X, Facebook, LinkedIn and YouTube as a means of disclosing information about the Company, its services and other matters and for complying with its disclosure obligations under Regulation FD.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking terminology such as "believes," "expects," "may," "will," "should," "anticipates," "plans," or similar expressions or the negative of these terms and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on Inhibikase's current expectations and assumptions. Such statements are subject to certain risks and uncertainties, which could cause Inhibikase's actual results to differ materially from those anticipated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include our ability to satisfy customary closing conditions for the offering, including obtaining stockholder approval, our ability to enroll and complete the 201 Trial evaluating risvodetinib in untreated Parkinson’s disease, to successfully apply for and obtain FDA approval for IkT-001Pro in blood and stomach cancers or other indications, to successfully conduct clinical trials that are statistically significant and whether results from our animal studies may be replicated in humans, as well as such other factors that are included in our periodic reports on Form 10-K and Form 10-Q that we file with the U.S. Securities and Exchange Commission. Any forward-looking statement in this release speaks only as of the date of this release. Inhibikase undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

Contacts:

Company Contact:
Milton H. Werner, PhD
President & CEO
678-392-3419
info@inhibikase.com

Investor Relations:
Alex Lobo
Stern Investor Relations, Inc.
alex.lobo@sternir.com

FAQ

What is the purpose of Inhibikase Therapeutics' recent direct offering?

Inhibikase Therapeutics aims to raise $4.0 million in gross proceeds through a direct offering and warrant inducement.

How many new shares is Inhibikase Therapeutics issuing in the direct offering?

The company is issuing 1,672,452 shares of common stock or pre-funded warrants.

What is the exercise price for Inhibikase Therapeutics' new warrants?

The exercise price for the new Series A, B, C, and D warrants is set at $1.68 per share.

When is the expected closing date for Inhibikase Therapeutics' offering?

The offering is expected to close on or about May 22, 2024, subject to customary closing conditions.

What are the expiration dates for the new warrants issued by Inhibikase Therapeutics?

Series A and C warrants expire one year from the stockholder approval date, while Series B and D warrants expire five years from the approval date.

Who acted as the placement agent for Inhibikase Therapeutics' offering?

Maxim Group is the sole placement agent for the offering.

How will shareholder dilution be affected by Inhibikase Therapeutics' new offering?

The issuance of new shares and warrants could lead to shareholder dilution.

What financial impact will the offering have on Inhibikase Therapeutics?

The offering will generate $4.0 million in gross proceeds before fees and expenses.