NLS Pharmaceutics and Kadimastem Announces Up to $3 Million Equity Financing and $25 Million Equity Facility Agreement

Rhea-AI Summary

NLS Pharmaceutics (NASDAQ:NLSP) has secured a $2 million equity financing through preferred shares at $1.65 per share, with potential for an additional $1 million subject to shareholder approval. The company also signed a $25 million committed equity facility agreement.

The funding will support NLS's planned merger with Kadimastem, a clinical-stage cell therapy company focusing on neurodegenerative diseases and diabetes. The merged entity plans to conduct a Phase IIa multi-site clinical trial for AstroRx® in Amyotrophic Lateral Sclerosis (ALS) and a Phase I trial for IsletRx in type 1 diabetes patients post-merger.

The financing, closed on March 28, 2025, was secured at a 10% premium to the market share price. The securities were issued through a private placement under Section 4(a)(2) of the Securities Act and Regulation D. The merger remains subject to regulatory and shareholder approvals.

Positive

• Secured $2M immediate equity financing at 10% premium to market price
• Additional $25M committed equity facility agreement secured
• Potential for extra $1M in equity financing pending shareholder approval
• Funding enables advancement of two clinical trials post-merger

Negative

• Additional shareholder approval required for $1M financing portion
• Merger still subject to regulatory and shareholder approvals
• Securities issued through private placement with resale restrictions

Insights

Financial Analyst

NLS Pharmaceutics has secured a $2 million equity financing through preferred shares at $1.65 per share—a 10% premium to market price—with potential for an additional $1 million pending shareholder approval. Simultaneously, the company established a $25 million committed equity facility. For a micro-cap company with just $6.17 million market capitalization, this financing package is substantial and strategically significant.

The premium pricing signals investor confidence in the planned Kadimastem merger, representing a vote of confidence in the combined entity's future. The $2 million immediate funding provides critical capital for merger-related expenses and working capital, while the $25 million facility creates a financial runway for post-merger operations.

This financing architecture appears deliberately structured to facilitate the Kadimastem merger while minimizing immediate dilution through the premium-priced initial raise. The transaction transforms NLS from a CNS-focused company into a diversified regenerative medicine platform with multiple clinical-stage assets. The funding specifically earmarked for Phase IIa ALS and Phase I diabetes trials represents efficient capital allocation toward value-creating clinical milestones.

While the deal strengthens NLS's balance sheet ahead of the merger, investors should note that both companies remain pre-revenue with ongoing cash burn. The structure of the $25 million equity facility—including potential dilution effects—remains unspecified, representing an important consideration for existing shareholders despite the immediate financing's favorable terms.

Biotechnology Expert

This financing package strategically positions the merged NLS-Kadimastem entity to advance two promising regenerative medicine programs toward critical clinical milestones. AstroRx^®, Kadimastem's lead candidate for Amyotrophic Lateral Sclerosis (ALS), will progress to Phase IIa multi-site trials—a crucial efficacy validation step following earlier encouraging results. This represents a significant advancement in the ALS treatment landscape, where effective therapies remain desperately needed.

Equally noteworthy is the planned Phase I initiation for IseltRx in type 1 diabetes, marking Kadimastem's entry into metabolic disease with cell therapy. This program leverages similar cell manipulation expertise while targeting an entirely different indication, demonstrating pipeline diversification beyond neurological applications.

The merger creates an interesting therapeutic convergence—combining NLS's CNS disorder expertise with Kadimastem's cell therapy capabilities. This potentially enables novel approaches to neurological conditions through complementary scientific perspectives. The $2 million immediate funding plus $25 million facility provides sufficient capital for these near-term clinical initiatives while maintaining operational flexibility.

From a development perspective, the focused allocation toward specific clinical programs rather than preclinical research suggests a strategy prioritizing near-term clinical validation. The advancement to Phase IIa for AstroRx^® represents a particularly important inflection point that could generate proof-of-concept data in a notoriously challenging therapeutic area. This focused clinical strategy with secured funding improves execution probability for these capital-intensive regenerative medicine programs.

The equity financing is at a 10% premium to the market share price¹

ZÜRICH, SWITZERLAND / ACCESS Newswire / March 31, 2025 / NLS Pharmaceutics Ltd.(NASDAQ:NLSP) ("NLS" or the "Company"), a Swiss clinical-stage biopharmaceutical company focused on developing innovative therapies for central nervous system (CNS) disorders, today announced the closing of a $2 million equity financing of preferred shares at a stated value of $1.65 per share, with a potential second closing of up to an additional $1 million of preferred shares at a purchase price of $1.65 per share. The second closing of $1 million of preferred shares is subject to shareholder approval. The offering closed on Friday, March 28, 2025, and the gross proceeds to the Company from the offering were $2 million, before deducting offering expenses payable by the Company. The Company currently intends to use the net proceeds from the offering for expenses relating to the merger with Kadimastem Ltd. ("Kadimastem"), working capital and general corporate purposes

In addition, NLS has signed a $25 million committed equity facility agreement.These financings are intended to support the planned merger with Kadimastem, a clinical-stage cell therapy company specializing in neurodegenerative diseases and diabetes.

Specifically, this funding is intended to facilitate the merger by enabling the merged company to execute Kadimastem's phase IIa multi-site clinical trial for Amyotrophic Lateral Sclerosis (ALS) using AstroRx® and phase I for the IseltRx for type 1 diabetes patients, which is planned to commence following the merger.

"We are pleased to have secured this capital on favorable terms, which reflects investor confidence in our vision and the transformative potential of our planned merger with Kadimastem," said Alex Zwyer, CEO of NLS. "We believe that with these financial resources in place, we are well-positioned to move forward with completing the transaction and creating a leading company in the field of regenerative medicine and CNS disorders."

"We are happy to receive this financing as a vote of confidence by investors in the planned merger, Kadimastem leadership team and the assets of Kadimastem," said Ronen Twito, Executive Chairman and CEO of Kadimastem. "We believe the financing package will allow the merged company to initiate the planned Phase IIa clinical trial for AstroRx® and the Phase 1 clinical trial for IsletRx, paving the way for potentially transformative treatments in both ALS and diabetes."

The equity investment and committed equity facility are intended to strengthen the merged company's balance sheet and provide the flexibility needed to support the integration process and future pipeline development following the merger.

This news follows the filing of an amendment to NLS's registration statement on Form F-4 (File No. 333-284075) submission with the SEC. The merger with Kadimastem remains subject to customary closing conditions, including regulatory and shareholder approvals.

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

This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities in this offering, 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 NLS Pharmaceutics

NLS Pharmaceutics is a global biopharmaceutical company focused on developing next-generation therapies for sleep disorders, neurodegenerative diseases, and metabolic dysfunctions. Through a strategic licensing agreement with Aexon Labs, NLS is advancing a portfolio of non-sulfonamide dual orexin receptor agonists (DOXA), including AEX-2 and AEX-41, designed to restore sleep-wake balance, reduce neuroinflammation, and address metabolic dysregulation.

About Kadimastem

Kadimastem is a clinical stage cell therapy company, developing "off-the-shelf", allogeneic, proprietary cell products based on its technology platform for the expansion and differentiation of Human Embryonic Stem Cells (hESCs) into functional cells. AstroRx®, the company's lead product, is an astrocyte cell therapy in clinical development for the treatment for ALS and in pre-clinical studies for other neurodegenerative indications.

IsletRx is the company's treatment for diabetes. IsletRx is comprised of functional pancreatic islet cells producing and releasing insulin and glucagon, intended to treat and potentially cure patients with insulin-dependent diabetes. Kadimastem was founded by Professor Michel Revel, Chief Scientific Officer of Kadimastem and Professor Emeritus of Molecular Genetics at the Weizmann Institute of Science. Professor Revel received the Israel Prize for the invention and development of Rebif®, a multiple sclerosis blockbuster drug sold worldwide. Kadimastem is traded on the Tel Aviv Stock Exchange (TASE: KDST).

Forward-Looking Statements

This press release contains expressed or implied forward-looking statements pursuant to U.S. Federal securities laws. For example, NLS and Kadimastem are using forward-looking statements when they discuss the potential second closing of the equity financing, the expected use of proceeds from the offerings, the expected closing of the merger, the timing of the closing of the transaction and the potential benefits of the transaction to NLS and Kadimastem and their respective shareholders, as well as the expected strategic position of the combined company following the merger, if completed, and the plan to prepare and initiate a Phase IIa multi-site clinical trial of AstroRx®, Kadimastem's product candidate for Amyotrophic Lateral Sclerosis (ALS), and that the funding of the $3 million equity financing and $25 million equity facility agreement will support the merger with Kadimastem. These forward-looking statements and their implications are based on the current expectations of the management of NLS only and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in technology and market requirements; NLS may encounter delays or obstacles in launching and/or successfully completing its clinical trials; NLS products may not be approved by regulatory agencies, NLS technology may not be validated as it progresses further and its methods may not be accepted by the scientific community; NLS may be unable to retain or attract key employees whose knowledge is essential to the development of its products; unforeseen scientific difficulties may develop with NLS' process; NLS' products may wind up being more expensive than it anticipates; results in the laboratory may not translate to equally good results in real clinical settings; results of preclinical studies may not correlate with the results of human clinical trials; NLS patents may not be sufficient; NLS products may harm recipients; changes in legislation may adversely impact NLS; inability to timely develop and introduce new technologies, products and applications; and loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of NLS to differ materially from those contemplated in such forward-looking statements. Except as otherwise required by law, NLS undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. More detailed information about the risks and uncertainties affecting NLS is contained under the heading "Risk Factors" in NLS annual report on Form 20-F for the year ended December 31, 2023 filed with the Securities and Exchange Commission (SEC), which is available on the SEC's website, www.sec.gov, and in subsequent filings made by NLS with the SEC.

No Offer or Solicitation

This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Additional Information about the Transaction and Where to Find It

In connection with the proposed transaction, NLS has filed a Registration Statement on Form F-4, including a proxy statement/prospectus, with the SEC. NLS may also file other relevant documents with the SEC regarding the proposed transaction. This document is not a substitute for the proxy statement/prospectus or any other document that NLS may file with the SEC. The proxy statement (if and when available) will be mailed or delivered to shareholders of NLS and Kadimastem. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the proxy statement/prospectus (if and when available) and other documents containing important information about NLS and Kadimastem and the proposed transaction, once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by the Company will be available free of charge on NLS's website at www.nlspharma.com.

Participants in the Solicitation

NLS, Kadimastem, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from NLS and Kadimastem shareholders in respect of the proposed transaction. Information about the directors and executive officers of NLS, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in NLS's Annual Report on Form 20-F for the fiscal year ended December 31, 2023, which was filed with the SEC on May 15, 2024. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed merger when such materials become available. Investors should read the proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from NLS Pharmaceutics using the sources indicated above.

¹ as of March 26, 2025, day of signing the financing agreement

NLS Contacts:

InvestorRelations@nls-pharma.com
www.nlspharma.com

Kadimastem Contacts:

Sarah Bazak, Investors relations
s.bazak@kadimastem.com
www.kadimastem.com

Social Media: LinkedIn, X, Facebook, Instagram

SOURCE: NLS Pharmaceutics AG

View the original press release on ACCESS Newswire

FAQ

What is the total value of NLS Pharmaceutics (NLSP) recent financing package announced in March 2025?

The total financing package includes $3 million in equity financing ($2M secured, $1M potential) and a $25 million committed equity facility agreement.

What will NLSP use the March 2025 financing proceeds for?

The proceeds will fund merger expenses with Kadimastem, support clinical trials for AstroRx® (ALS) and IsletRx (diabetes), and provide working capital.

What are the key clinical trials planned after the NLSP-Kadimastem merger?

Post-merger plans include a Phase IIa multi-site trial for AstroRx® in ALS treatment and a Phase I trial for IsletRx in type 1 diabetes.

At what price were NLSP's preferred shares issued in the March 2025 financing?

The preferred shares were issued at $1.65 per share, representing a 10% premium to the market share price.