Moleculin Announces Exercise of Warrants for $5.8 Million Gross Proceeds

Rhea-AI Summary

Moleculin Biotech (MBRX) has secured agreements for the immediate exercise of existing warrants to purchase 5,828,570 shares of common stock at a reduced price of $1.00 per share, expecting to generate gross proceeds of approximately $5.8 million.

In exchange for the immediate cash exercise, the company will issue new unregistered warrants to purchase up to 11,657,140 shares of common stock at $0.75 per share, exercisable immediately upon issuance for a five-year term. The transaction is expected to close around February 14, 2025.

The proceeds will be used for working capital and general corporate purposes. The new warrants are being offered through private placement, and Moleculin has agreed to file a registration statement with the SEC for the resale of shares issuable upon exercise of these new warrants.

Positive

• Immediate capital raise of $5.8 million through warrant exercise
• Additional potential future funding through new warrants if exercised

Negative

• Potential dilution from issuance of 5.8M shares through warrant exercise
• Further dilution risk from additional 11.6M shares from new warrants
• Reduced warrant exercise price indicates possible financing pressure

Insights

Financial Analyst

This warrant exercise transaction reveals a sophisticated financial maneuver by Moleculin Biotech to strengthen its balance sheet. The company has secured $5.8 million in immediate capital through the exercise of approximately 5.8 million warrants at $1.00 per share, while simultaneously issuing new warrants at $0.75 per share - a 25% discount to the current exercise price.

The structure of this deal is particularly noteworthy for several reasons:

• The immediate capital injection improves the company's financial position without the typical discount and warrant coverage seen in traditional public offerings
• The new warrants, covering 11.6 million shares, represent potential additional future capital of up to $8.7 million if fully exercised
• The $0.75 exercise price of the new warrants, while lower than the current exercise, provides a clear price target for investors and could act as a psychological support level for the stock

For a late-stage pharmaceutical company with multiple drug candidates in development, this capital raise is important for advancing their pipeline. The transaction's timing and structure suggest management's strategic approach to minimize immediate dilution while maintaining future financing flexibility. However, investors should note that the new warrants, if exercised, would result in additional dilution of approximately 285% based on the current shares outstanding.

HOUSTON, Feb. 13, 2025 /PRNewswire/ -- Moleculin Biotech, Inc., (Nasdaq: MBRX) ("Moleculin" or the "Company"), a late-stage pharmaceutical company with a broad portfolio of drug candidates targeting hard-to-treat tumors and viruses, today announced it has entered into agreements with certain holders of its existing warrants for the immediate exercise of certain outstanding warrants to purchase up to an aggregate of 5,828,570 shares of common stock of the Company originally issued in December 2023 and August 2024 all at a reduced exercise price of $1.00 per share. The shares of common stock issuable upon exercise of the outstanding warrants are registered pursuant to effective registration statements on Form S-1 (File No. 333-280951) and on Form S-1 (File No. 333-276851). The aggregate gross proceeds from the exercise of the existing warrants is expected to total approximately $5.8 million, before deducting financial advisory fees.

Roth Capital Partners is acting as the Company's financial advisor for this transaction.

In consideration for the immediate exercise of the warrants for cash, the Company will issue new unregistered warrants to purchase shares of common stock. The new warrants will be exercisable for an aggregate of up to 11,657,140 shares of common stock, at an exercise price of $0.75 per share and will be immediately exercisable upon issuance and for a term of five years from the issuance date.

The transaction is expected to close on or about February 14, 2025, subject to satisfaction of customary closing conditions. The Company intends to use the net proceeds from the offering for working capital and 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 "1933 Act") and, along with the shares of common stock issuable upon their exercise, have not been registered under the 1933 Act, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission ("SEC") or an applicable exemption from such registration requirements. The Company has agreed to file a registration statement with the SEC covering the resale of the shares of common stock issuable upon exercise of the new warrants.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy 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 Moleculin Biotech, Inc.

Moleculin Biotech, Inc. is a Phase 3 clinical stage pharmaceutical company advancing a pipeline of therapeutic candidates addressing hard-to-treat tumors and viruses. The Company's lead program, Annamycin, is a next-generation anthracycline designed to avoid multidrug resistance mechanisms and to eliminate the cardiotoxicity common with currently prescribed anthracyclines. Annamycin is currently in development for the treatment of relapsed or refractory acute myeloid leukemia (AML) and soft tissue sarcoma (STS) lung metastases.

The Company is initiating the MIRACLE (Moleculin R/R AML AnnAraC Clinical Evaluation) Trial (MB-108), a pivotal, adaptive design Phase 3 trial evaluating Annamycin in combination with cytarabine, together referred to as AnnAraC, for the treatment of relapsed or refractory acute myeloid leukemia. Following a successful Phase 1B/2 study (MB-106), with input from the FDA, the Company believes it has substantially de-risked the development pathway towards a potential approval for Annamycin for the treatment of AML. This study is subject to appropriate future filings with potential additional feedback from the FDA and their foreign equivalents.

Additionally, the Company is developing WP1066, an Immune/Transcription Modulator capable of inhibiting p-STAT3 and other oncogenic transcription factors while also stimulating a natural immune response, targeting brain tumors, pancreatic and other cancers. Moleculin is also engaged in the development of a portfolio of antimetabolites, including WP1122 for the potential treatment of pathogenic viruses, as well as certain cancer indications.

Forward-Looking Statements

Some of the statements in this release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. Forward-looking statements in this press release include, without limitation, the closing of the offering and the use of the proceeds thereof. Although Moleculin believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Moleculin has attempted to identify forward looking statements by terminology including 'believes,' 'estimates,' 'anticipates,' 'expects,' 'plans,' 'projects,' 'intends,' 'potential,' 'may,' 'could,' 'might,' 'will,' 'should,' 'approximately' or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors, including those discussed under Item 1A. "Risk Factors" in our most recently filed Form 10-K filed with the Securities and Exchange Commission (SEC) and updated from time to time in our Form 10-Q filings and in our other public filings with the SEC. Any forward-looking statements contained in this release speak only as of its date. We undertake no obligation to update any forward-looking statements contained in this release to reflect events or circumstances occurring after its date or to reflect the occurrence of unanticipated events.

Investor Contact:
JTC Team, LLC
Jenene Thomas
(908) 824-0775
MBRX@jtcir.com

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SOURCE Moleculin Biotech, Inc.

FAQ

How much capital did MBRX raise through the warrant exercise in February 2025?

MBRX raised approximately $5.8 million in gross proceeds through the exercise of warrants at $1.00 per share.

What is the exercise price of MBRX's newly issued warrants?

The new warrants have an exercise price of $0.75 per share.

How many new warrant shares did MBRX issue in the February 2025 transaction?

MBRX issued new warrants for up to 11,657,140 shares of common stock.

What is the expiration term for MBRX's new warrants issued in February 2025?

The new warrants have a five-year term from their issuance date.

How does MBRX plan to use the proceeds from the warrant exercise?

MBRX intends to use the net proceeds for working capital and general corporate purposes.