Modular Medical Announces $12 Million Private Placement

Rhea-AI Summary

Modular Medical (Nasdaq:MODD) has secured $12 million through a private placement of units, priced at $1.92 per unit. Each unit comprises two common stock shares and one warrant to purchase common stock at $1.12 per share, exercisable for four years. The company will issue 12,495,312 shares and warrants for 6,247,656 shares.

The funding will support supply-chain optimization and margin improvement for their MODD1 product ahead of broad commercial launch. Additionally, the company plans to submit a tubeless version of MODD1 to the FDA in Q3 2025 and pursue CE mark certification for overseas markets.

A concurrent direct placement offering of up to 446,429 additional units aims to raise up to $500,000 under the same terms. Company officers and directors will participate, purchasing 374,478 units at the same price as other investors. Newbridge Securities served as the sole placement agent.

Positive

• Secured $12 million in funding through private placement
• Management showing confidence with insider participation in the offering
• Additional $500,000 potential funding through concurrent direct placement
• Clear development timeline with FDA submission planned for Q3 2025

Negative

• Significant shareholder dilution through issuance of 12.5M new shares
• At-market pricing suggests premium for investors
• Requires registration statement for resale, indicating potential selling pressure
• Additional capital needs may be required before reaching commercialization

Insights

Financial Analyst

Modular Medical's $12 million private placement represents a significant capital infusion relative to its $35 million market capitalization. The financing structure - units at $1.92 comprising two common shares plus one $1.12 warrant - offers several insights into investor sentiment.

This transaction will result in immediate issuance of 12.5 million new shares, representing approximately 33% dilution to existing shareholders. If all warrants are eventually exercised, dilution could approach 50%, but would bring in additional $7 million.

The at-market pricing indicates neither a premium nor discount valuation, suggesting balanced negotiation leverage. More encouraging is the warrant exercise price of $1.12 set above the current $0.95 share price, indicating investor confidence in future appreciation.

Insider participation is particularly noteworthy - management and directors committing to 374,478 units under identical terms as institutional investors creates strong alignment of interests.

The capital allocation strategy focuses on three critical areas: supply-chain optimization for MODD1, FDA submission preparation for a tubeless version, and CE mark pursuit for international markets. This balanced approach addresses near-term commercialization needs while maintaining development momentum.

For a pre-revenue medical device company, securing this magnitude of funding provides crucial operational runway, though investors should monitor burn rate against the company's development timeline, particularly the Q3 2025 FDA submission target.

Medical Device Industry Expert

This financing strategically positions Modular Medical to address the two critical challenges facing emerging insulin pump manufacturers: commercialization execution and product portfolio expansion.

The company's focus on "almost-pumpers" with its FDA-cleared MODD1 device targets a significant underserved segment - patients who would benefit from pump therapy but are deterred by complexity or cost of existing options. Securing funding for supply-chain optimization is crucial for achieving the margin structure necessary to deliver on their affordability promise while building a sustainable business.

The planned tubeless version submission in Q3 2025 represents vital product line expansion. The insulin delivery market has demonstrated strong preference for tubeless designs (evidenced by Insulet's Omnipod success), making this development path strategically sound.

Pursuing the CE mark simultaneously with U.S. commercialization preparations indicates appropriate global market awareness. European markets have historically been receptive to innovative diabetes technologies, potentially providing additional revenue opportunities and validation.

The company's founder, Paul DiPerna, previously founded Tandem Diabetes and designed their insulin pump technology, bringing invaluable industry experience. This pedigree likely factored positively in investor decisions.

While Modular Medical faces entrenched competition from Medtronic, Insulet, and Tandem, their positioning as providing "diabetes care for the rest of us" targets expansion of the overall pump market rather than just competing for existing users - a potentially differentiated strategy in this space.

SAN DIEGO, CA / ACCESS Newswire / March 20, 2025 / Modular Medical, Inc. (Nasdaq:MODD) ("Modular Medical" or the "Company"), an insulin delivery technology company with the first FDA-cleared patch pump designed specifically to meet the needs of "almost-pumpers" with its user-friendly and affordable design, announced today the execution of definitive subscription agreements with institutional and accredited investors for a private placement, which is expected to result in gross proceeds of approximately $12 million, before deducting fees and offering expenses.

The private placement consists of the sale of units comprised of two shares of common stock, together with one warrant to purchase one share of common stock. The units are being sold at a purchase price of $1.92 per unit and were priced at-the-market under the rules of the Nasdaq Stock Market. The private placement is expected to close on or about March 25, 2025, subject to the satisfaction of customary closing conditions.

The Company intends to use the proceeds from the private placement for supply-chain optimization and margin improvement on its MODD1 product in preparation for broad commercial availability and preparing the submission to the FDA of a tubeless version of the MODD1 product, which the Company currently believes it will submit to the FDA in the third quarter of 2025, along with ongoing work to obtain the CE mark required for overseas markets.

Newbridge Securities Corporation acted as the sole placement agent for the transaction. Titan Partners Group, a division of American Capital Partners, acted as financial advisor to the Company.

Terms of the Private Placement

In connection with the private placement, the Company will issue 12,495,312 shares of common stock and warrants to purchase 6,247,656 shares of common stock. Each warrant will be immediately exercisable and entitles the holder to acquire one share of common stock at an exercise price of $1.12 per share, for a period of four years following the closing of the offering.

Certain officers and directors of the Company intend to purchase a total of 374,478 units in this private placement at the same price as other investors.

The securities being offered and sold by the Company in the private placement have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission (the "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 and shares underlying the warrants to purchase common stock to be issued in the private placement. Any resale of the Company's shares under such resale registration statement will be made only by means of a prospectus.

Concurrent Offering

Concurrently with the private placement by Newbridge Securities Corporation, the Company is also undertaking, a direct private placement of up to 446,429 additional units for additional aggregate gross proceeds of up to an additional $500,000 on the same terms as the private placement (the "Concurrent Direct Placement"). The units being sold in the Concurrent Direct Placement will be offered and sold to persons reasonably believed to be qualified institutional buyers pursuant to Regulation S under the Securities Act. The Company has agreed to file a registration statement with the SEC covering the resale of the shares of common stock and shares underlying the warrants to purchase common stock to be issued in the Concurrent Direct Placement. Any resale of the Company's shares under such resale registration statement will be made only by means of a prospectus.

This press release shall not constitute an offer to sell or the 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 registration or qualification under the securities laws of any such state or jurisdiction. The securities will not be registered under the Securities Act or any state securities laws when issued at the closing of the private placement or the Concurrent Direct Placement, as applicable, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state laws.

About Modular Medical

Modular Medical, Inc. (Nasdaq:MODD) is a development-stage medical device company that intends to launch the next generation of insulin delivery technology. Using its patented technologies, the company seeks to eliminate the tradeoff between complexity and efficacy, thereby making top quality insulin delivery both affordable and simple to learn. Our mission is to improve access to the highest standard of glycemic control for people with diabetes taking it beyond "superusers" and providing "diabetes care for the rest of us."

Modular Medical was founded by Paul DiPerna, a seasoned medical device professional and microfluidics engineer. Prior to founding Modular Medical, Mr. DiPerna was the founder (in 2005) of Tandem Diabetes and invented and designed its insulin pump. More information is available at https://modular-medical.com.

Safe Harbor Statement

Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute ‘forward-looking statements' within the meaning of The Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements relating to the expected trading commencement and closing dates. The words ‘anticipate,' ‘believe,' ‘continue,' ‘could,' ‘estimate,' ‘expect,' ‘intend,' ‘may,' ‘plan,' ‘potential,' ‘predict,' ‘project,' ‘should,' ‘target,' ‘will,' ‘would' and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the uncertainties related to market conditions and other factors described more fully in the section entitled ‘Risk Factors' in Modular Medical's Annual Report on Form 10-K for the year ended March 31, 2024, and other periodic reports filed with the Securities and Exchange Commission. Any forward-looking statements contained in this press release speak only as of the date hereof, and Modular Medical specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Modular Medical

Jeb Besser
Chief Executive Officer
Modular Medical, Inc.
+1 (617) 399-1741
IR@modular-medical.com

SOURCE: Modular Medical, Inc.

View the original press release on ACCESS Newswire

FAQ

How much funding did Modular Medical (MODD) raise in its March 2025 private placement?

Modular Medical raised $12 million in gross proceeds through the private placement, with an additional potential $500,000 through a concurrent direct placement.

What are the terms of MODD's March 2025 private placement warrants?

The warrants are exercisable for 4 years at $1.12 per share, with one warrant issued for every two shares of common stock.

When will Modular Medical submit its tubeless MODD1 version to the FDA?

The company plans to submit the tubeless version of MODD1 to the FDA in the third quarter of 2025.

How will MODD use the proceeds from the March 2025 private placement?

The proceeds will fund supply-chain optimization, margin improvement for MODD1, FDA submission of a tubeless version, and CE mark certification pursuit.