Kazia Therapeutics Announces Closing of $2.0 Million Registered Direct Offering

Rhea-AI Summary

Kazia Therapeutics (NASDAQ: KZIA) has successfully closed its previously announced registered direct offering, raising $2.0 million through the sale of 1,333,333 American Depositary Shares (ADSs) at $1.50 per ADS to Alumni Capital LP. Each ADS represents 100 ordinary shares.

The offering included concurrent private placement of unregistered warrants to purchase up to 1,333,333 ADSs at an exercise price of $1.50 per ADS. These warrants will be immediately exercisable and expire after five and a half years. Maxim Group served as the exclusive placement agent.

The company plans to use the net proceeds for general corporate purposes, including working capital, research expenses, clinical development and commercial efforts, and general administrative expenses.

Positive

• Secured $2.0 million in immediate funding
• Additional potential funding through warrant exercise at $1.50 per ADS
• Support from existing fundamental healthcare investor shows continued confidence

Negative

• Dilutive offering to existing shareholders
• Low pricing of $1.50 per ADS for both shares and warrants
• Funds primarily for general corporate purposes rather than specific growth initiatives

Insights

Financial Analyst

The $2.0 million registered direct offering by Kazia Therapeutics represents a critical but dilutive capital raise for this micro-cap oncology company. The pricing at $1.50 per ADS with matching warrants suggests challenging market conditions, as the warrant exercise price matches the offering price, indicating significant concessions to secure funding. The structure, involving both registered ADSs and unregistered warrants, is a common approach for distressed biotech companies seeking to maintain operations.

The total potential dilution could reach 2,666,666 ADSs (including warrant exercises), which is substantial given Kazia's current market cap of approximately $6.5 million. The involvement of Alumni Capital LP as an existing investor provides some validation, but the terms reflect the company's weak negotiating position. The immediate exercisability of warrants with a 5.5-year term creates long-term overhang concerns.

While the funding extends the operational runway, the small raise amount suggests this may be a bridge financing rather than a comprehensive solution to the company's capital needs. The use of proceeds for 'general corporate purposes' indicates immediate working capital requirements rather than strategic growth initiatives.

Biotech Investment Specialist

This financing deal reveals deeper concerns about Kazia's current position in the competitive oncology space. The microscopic size of the raise - just $2.0 million - barely provides enough runway for meaningful clinical development progress in oncology, where trials typically require tens of millions of dollars. The fact that they could only secure this amount from an existing investor signals potential challenges with their clinical programs or market confidence.

The warrant structure is particularly telling - offering immediate exercisability at the offering price suggests desperation for capital. In stronger biotech deals, warrants typically carry a premium to the offering price and delayed exercisability. The 5.5-year warrant term creates a persistent overhang that could impede future capital raises at better valuations.

For context, most viable oncology drug development programs require $20-50 million annually for late-stage trials. This raise's size indicates it's likely a stopgap measure rather than strategic growth capital, raising questions about the company's ability to advance its pipeline effectively without significant additional dilution.

SYDNEY, Jan. 14, 2025 /PRNewswire/ -- Kazia Therapeutics Limited (NASDAQ: KZIA) ("Kazia" or the "Company"), an oncology-focused drug development company, today announced that it has closed its previously announced registered direct offering with existing fundamental healthcare investor, Alumni Capital LP, of 1,333,333 of the Company's American Depositary Shares ("ADSs") (or ADS equivalents in lieu thereof), each ADS representing 100 ordinary shares of the Company, at a purchase price of $1.50 per ADS (or ADS equivalent in lieu thereof) and concurrent private placement of unregistered warrants to purchase up to an aggregate of 1,333,333 ADSs. The warrants will have an exercise price of $1.50 per ADS, will be immediately exercisable upon issuance, and will expire five and one-half years from the date of issuance.

Maxim Group LLC acted as the exclusive placement agent for the registered direct offering and concurrent private placement.

The gross proceeds to the Company from the offering are approximately $2.0 million, before deducting the placement agent's fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from this offering for general corporate purposes, which may include working capital, expenses related to research, clinical development and commercial efforts, and general and administrative expenses.

The securities described above (excluding the warrants and ADSs underlying the warrants) were offered and sold by the Company in a registered direct offering pursuant to a "shelf" registration statement on Form F-3 (File No. 333-281937) that was originally filed with the Securities and Exchange Commission (the "SEC") on September 5, 2024, and declared effective on September 12, 2024. The offering of such securities in the registered direct offering were made only by means of a prospectus supplement that forms a part of the effective registration statement. A final prospectus supplement and the accompanying base prospectus relating to the registered direct offering has been filed with the SEC and is available on the SEC's website at www.sec.gov. Electronic copies of the final prospectus supplement and the accompanying base prospectus may also be obtained from Maxim Group LLC at 300 Park Avenue, New York, NY 10022, by phone at (212) 895-3500 or e-mail at syndicate@maximgrp.com.

The unregistered warrants described above were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Act"), and Regulation D promulgated thereunder and, along with the ADSs representing ordinary shares underlying such warrants, have not been registered under the Act, or applicable state securities laws. Accordingly, the warrants and the underlying ADSs may not be reoffered or resold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Act and such applicable state securities laws.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein, 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 Kazia Therapeutics Limited

Kazia Therapeutics Limited (NASDAQ: KZIA) is an oncology-focused drug development company, based in Sydney, Australia. Our lead program is paxalisib, an investigational brain-penetrant inhibitor of the PI3K / Akt / mTOR pathway, which is being developed to treat multiple forms of brain cancer. Licensed from Genentech in late 2016, paxalisib is or has been the subject of ten clinical trials in this disease. A completed Phase 2/3 study in glioblastoma (GBM-Agile) was reported in 2024 and discussions are ongoing for designing and executing a pivotal registrational study in pursuit of a standard approval. Other clinical trials involving paxalisib are ongoing in brain metastases, diffuse midline gliomas, and primary CNS lymphoma, with several of these trials having reported encouraging interim data. Paxalisib was granted Orphan Drug Designation for glioblastoma by the FDA in February 2018, and Fast Track Designation (FTD) for glioblastoma by the FDA in August 2020. Paxalisib was also granted FTD in July 2023 for the treatment of solid tumour brain metastases harboring PI3K pathway mutations in combination with radiation therapy. In addition, paxalisib was granted Rare Pediatric Disease Designation and Orphan Drug Designation by the FDA for diffuse intrinsic pontine glioma in August 2020, and for atypical teratoid / rhabdoid tumours in June 2022 and July 2022, respectively. Kazia is also developing EVT801, a small-molecule inhibitor of VEGFR3, which was licensed from Evotec SE in April 2021. Preclinical data has shown EVT801 to be active against a broad range of tumour types and has provided evidence of synergy with immuno-oncology agents. A Phase I study has been completed and preliminary data was presented at 15th Biennial Ovarian Cancer Research Symposium in September 2024. For more information, please visit www.kaziatherapeutics.com or follow us on X @KaziaTx.

Forward-Looking Statements

This press release may contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, which can generally be identified as such by the use of words such as "may," "will," "estimate," "future," "forward," "anticipate," or other similar words. Any statement describing Kazia's future plans, strategies, intentions, expectations, objectives, goals or prospects, and other statements that are not historical facts, are also forward-looking statements, including, but not limited to, statements regarding: the intended use of proceeds from the offering, and the Company's future expectations, plans and prospects. Such statements are based on Kazia's current expectations and projections about future events and future trends affecting its business and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements, including risks and uncertainties: related to market and other conditions, associated with clinical and preclinical trials and product development, including the risk that preliminary or interim data may not reflect final results, related to regulatory approvals, and related to the impact of global economic conditions. These and other risks and uncertainties are described more fully in Kazia's Annual Report, filed on form 20-F with the SEC, and in subsequent filings with the SEC. Kazia undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required under applicable law. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release.

This announcement was authorized for release by Dr. John Friend, CEO.

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SOURCE Kazia Therapeutics Limited

FAQ

What are the terms of Kazia Therapeutics' (KZIA) January 2024 registered direct offering?

Kazia raised $2.0 million by selling 1,333,333 ADSs at $1.50 per ADS, with concurrent warrants to purchase an equal number of ADSs at the same price, exercisable immediately and expiring in 5.5 years.

How will KZIA use the proceeds from its $2.0 million offering?

The proceeds will be used for general corporate purposes, including working capital, research expenses, clinical development and commercial efforts, and general administrative expenses.

What is the exercise price and duration of KZIA's January 2024 warrants?

The warrants have an exercise price of $1.50 per ADS, are immediately exercisable upon issuance, and will expire five and one-half years from the date of issuance.

Who participated in KZIA's January 2024 registered direct offering?

The offering was made to Alumni Capital LP, an existing fundamental healthcare investor, with Maxim Group acting as the exclusive placement agent.