Lipella Pharmaceuticals Announces $1.28 Million Registered Direct Offering of Common Stock Priced At-the-Market Under Nasdaq Rules

Rhea-AI Summary

Lipella Pharmaceuticals (Nasdaq: LIPO), a clinical-stage biotech company, has announced a $1.28 million registered direct offering of common stock priced at-the-market under Nasdaq rules. The offering includes 2,066,000 shares at $0.62 per share or pre-funded warrants. H.C. Wainwright & Co. is the exclusive placement agent. The offering is expected to close around August 1, 2024, subject to customary conditions. Lipella plans to use the net proceeds for working capital and general corporate purposes. The securities are being offered through a previously filed and effective shelf registration statement on Form S-3.

Positive

• Secured $1.28 million in gross proceeds through registered direct offering
• Offering priced at-the-market under Nasdaq rules, potentially indicating fair valuation
• Funds to be used for working capital and general corporate purposes, supporting ongoing operations

Negative

• Potential dilution of existing shareholders due to issuance of new shares
• Offering price of $0.62 per share may indicate low stock valuation
• Additional expenses related to placement agent fees and offering costs will reduce net proceeds

Insights

Financial Analyst

Lipella Pharmaceuticals' recent $1.28 million registered direct offering is a significant development that warrants attention. The company is selling 2,066,000 shares of common stock at $0.62 per share, a price set at-the-market under Nasdaq rules. This move suggests a strategic effort to raise capital, likely to support ongoing operations and research initiatives.

The pricing strategy is noteworthy. By offering shares at-the-market, Lipella is essentially selling at the current trading price, which could indicate a lack of premium or discount typically associated with such offerings. This approach might be viewed as a balanced attempt to raise funds without significantly diluting existing shareholders or undervaluing the stock.

However, investors should consider the dilutive effect of this offering. With Lipella's market cap hovering around $7 million pre-announcement, this $1.28 million raise represents a substantial 18% increase in outstanding shares. Such dilution could put downward pressure on the stock price in the short term.

The company's intention to use the proceeds for working capital and general corporate purposes is quite broad. While this provides flexibility, it also lacks specificity that investors might desire, especially given Lipella's status as a clinical-stage biotech company where capital is typically directed towards specific research or clinical trial initiatives.

In the broader context of biotech financing, this relatively small raise might indicate either a cautious approach to capital markets or investor appetite. It's important to monitor how efficiently Lipella deploys this capital and whether it will be sufficient to reach significant milestones that could drive value creation.

Biotech Industry Expert

Lipella Pharmaceuticals' $1.28 million offering, while modest in size, provides a critical cash infusion for this clinical-stage biotech company. For a firm addressing serious diseases with significant unmet need, every dollar of funding is important to advance their pipeline.

The use of a registered direct offering is a strategic choice. It's typically faster and less expensive than a traditional public offering, allowing Lipella to capitalize on market conditions quickly. The at-the-market pricing suggests the company and its placement agent, H.C. Wainwright & Co., believe the current market price fairly reflects Lipella's value.

However, the size of this raise raises questions about Lipella's burn rate and runway. Clinical-stage biotech companies often require substantial capital to fund trials and operations. A $1.28 million raise might only extend the company's runway by a few months, depending on their current cash position and burn rate. Investors should scrutinize Lipella's latest financial statements to understand how this influx fits into their overall financial strategy.

The inclusion of pre-funded warrants as an alternative to common stock is an interesting wrinkle. These instruments can be attractive to certain investors, potentially allowing Lipella to secure commitments from parties who might otherwise be constrained by ownership limitations.

Looking ahead, the key for Lipella will be demonstrating progress in their clinical programs. With this additional funding, stakeholders will expect to see advancements in the company's pipeline that justify this dilution and potentially set the stage for larger, more substantial raises in the future. The biotech sector is highly dependent on clinical milestones and Lipella's ability to achieve these will be important for maintaining investor confidence and securing the additional capital likely needed for late-stage development.

PITTSBURGH, Pa., Aug. 01, 2024 (GLOBE NEWSWIRE) -- Lipella Pharmaceuticals Inc. (“Lipella” or the “Company”) (Nasdaq: LIPO), a clinical-stage biotechnology company addressing serious diseases with significant unmet need, today announced that it has entered into a definitive agreement for the purchase and sale of an aggregate of 2,066,000 shares of common stock (or pre-funded warrants in lieu thereof) at a purchase price of $0.62 per share (or pre-funded warrant in lieu thereof) in a registered direct offering priced at-the-market under Nasdaq rules. The offering is expected to close on or about August 1, 2024, subject to the satisfaction of customary closing conditions.

H.C. Wainwright & Co. is acting as the exclusive placement agent for the offering.

The gross proceeds to Lipella from the offering are expected to be approximately $1.28 million, before deducting the placement agent’s fees and other offering expenses payable by the Company. Lipella currently intends to use the net proceeds from the offering for working capital and general corporate purposes.

The securities described above are being offered and sold by the Company pursuant to a “shelf” registration statement on Form S-3 (Registration No. 333-276815), including a base prospectus, previously filed with the Securities and Exchange Commission (“SEC”) on February 1, 2024 and declared effective by the SEC on February 8, 2024. The offering of the securities is being made only by means of a prospectus supplement that forms a part of such registration statement. A prospectus supplement and accompanying base prospectus relating to the offering will be filed with the SEC and will be available on the SEC’s website located at http://www.sec.gov. Electronic copies of the prospectus supplement and accompanying base prospectus may also be obtained, when available, by contacting H.C. Wainwright & Co., LLC at 430 Park Avenue, 3rd Floor, New York, NY 10022, by phone at (212) 856-5711 or e-mail at placements@hcwco.com.

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 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 jurisdiction.

About Lipella Pharmaceuticals

Lipella is a clinical-stage biotechnology company focused on developing new drugs by reformulating the active agents in existing generic drugs and optimizing these reformulations for new applications. Additionally, Lipella maintains a therapeutic focus on diseases with significant, unaddressed morbidity and mortality where no approved drug therapy currently exists. Lipella completed its initial public offering in December 2022. For more information, please visit www.lipella.com or LinkedIn.

Forward-Looking Statements

This press release includes certain “forward-looking statements.” All statements, other than statements of historical fact, included in this press release regarding, among other things, the satisfaction of the closing conditions of this registered direct offering, our strategy, future operations, financial position, prospects, pipeline and opportunities, sources of growth, successful implementation of our proprietary technology, plans and objectives are forward-looking statements. Forward-looking statements can be identified by words such as “may,” “will,” “could,” “continue,” “would,” “should,” “potential,” “target,” “goal,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “predicts,” “expects,” “projects” and similar references to future periods. Forward-looking statements are based on our current expectations and assumptions regarding future events and financial trends that we believe may affect among other things, the completion of the offering, the satisfaction of customary closing conditions related to the offering, the anticipated use of proceeds from offering, our financial condition, results of operations, business strategy, short- and long-term business operations and objectives, and financial needs. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. There are risks, uncertainties and other factors, both known and unknown, that could cause actual results to differ materially from those in the forward-looking statements which include, but are not limited to, regional, national or global political, economic, business, competitive, market and regulatory conditions, and other factors. Any forward-looking statement made by us is based upon the reasonable judgment of our management at the time such statement is made and speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable law. Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. In addition, the information contained in this press release is as of the date hereof, and the Company has no obligation to update such information, including in the event that such information becomes inaccurate. You should not construe the contents of this press release as legal, tax and financial advisors as to legal and related matters concerning the matters described herein.

CONTACT
Dr. Jonathan Kaufman, CEO
Lipella Pharmaceuticals
Info@Lipella.com
1-412-894-1853

Jeff Ramson
PCG Advisory 
jramson@pcgadvisory.com

FAQ

What is the size and price of Lipella Pharmaceuticals' (LIPO) recent stock offering?

Lipella Pharmaceuticals (LIPO) announced a registered direct offering of 2,066,000 shares of common stock (or pre-funded warrants) at $0.62 per share, totaling approximately $1.28 million in gross proceeds.

When is Lipella Pharmaceuticals' (LIPO) stock offering expected to close?

The stock offering is expected to close on or about August 1, 2024, subject to the satisfaction of customary closing conditions.

How does Lipella Pharmaceuticals (LIPO) plan to use the proceeds from the stock offering?

Lipella Pharmaceuticals (LIPO) intends to use the net proceeds from the offering for working capital and general corporate purposes.

Who is the placement agent for Lipella Pharmaceuticals' (LIPO) stock offering?

H.C. Wainwright & Co. is acting as the exclusive placement agent for Lipella Pharmaceuticals' (LIPO) stock offering.