NeuroBo Pharmaceuticals Announces the Closing of up to $70 Million Concurrent Private Placement and Registered Direct Offering Priced At-the-Market Under Nasdaq Rules

Rhea-AI Summary

NeuroBo Pharmaceuticals has closed a private placement and a registered direct offering priced at-the-market under Nasdaq rules, securing approximately $20 million upfront. The company issued 4,325,701 shares of common stock at $3.93 per share in the private placement and 763,359 shares in the direct offering.

The total gross proceeds could reach up to $70 million, contingent on the full exercise of Series Warrants linked to clinical milestones. The funds will support working capital, general corporate purposes, and the clinical development of DA-1726 for obesity treatment.

H.C. Wainwright & Co. served as the exclusive placement agent for the offerings.

Positive

• Secured $20 million upfront from offerings.
• Potential total gross proceeds of up to $70 million upon full exercise of Series Warrants.
• Funds to be used for clinical development of DA-1726 for obesity treatment.

Negative

• Potential shareholder dilution from issuing 5,089,060 Series A warrants and 7,633,591 Series B warrants.
• Uncertainty regarding the full exercise of Series Warrants.

Insights

Financial Analyst

NeuroBo Pharmaceuticals has closed a significant financial transaction that will impact its short-term and long-term financial health. The private placement and registered direct offering have collectively secured approximately $20 million in gross proceeds, with the potential to raise an additional $50 million through the exercise of Series Warrants, provided certain clinical milestones are met. This influx of capital is important for NeuroBo’s ongoing projects, particularly the clinical development of DA-1726, which targets obesity.

This financing method is advantageous as it leverages market conditions under Nasdaq rules, avoiding the uncertainty of traditional public offerings. However, it also carries risks, primarily the dependency on clinical trial success for the full realization of funds. Investors should note that the Series Warrants' exercisability is contingent on positive Phase 1 trials, adding a layer of speculative risk.

In the short term, securing $20 million improves NeuroBo's liquidity, ensuring operational stability and enabling further clinical developments. In the long term, the full success hinges on the outcome of these early-stage trials. Investors must weigh the immediate financial relief against the potential for future dilution and the inherent uncertainties in clinical research.

Understanding this, investors should also be aware of the dilution effect from the issuance of new shares and warrants. While the company gains much-needed capital, existing shareholders' value might be diluted, which could impact stock prices adversely if the clinical trials do not meet expectations.

Medical Research Analyst

The capital raised by NeuroBo is primarily earmarked for the continued clinical development of DA-1726, a treatment targeting obesity. This is a significant area of interest given the growing obesity epidemic and the high demand for effective treatments. Phase 1 trials are critical as they assess the safety and dosage of DA-1726 while providing preliminary efficacy data.

If the Phase 1 Part 3 trial yields positive results, it could significantly de-risk the asset and attract further investment. However, early-stage clinical trials are inherently unpredictable. The success of DA-1726 will depend on not only safety and efficacy but also on differentiation from existing and emerging obesity treatments.

From a medical research perspective, achieving favorable results in the multiple ascending dose (MAD) data readout and Phase 1 Part 3 would validate the therapeutic potential of DA-1726. Conversely, any setbacks or adverse findings could jeopardize not only this specific development but also investor confidence in NeuroBo’s broader pipeline.

Market Research Analyst

NeuroBo's strategy to secure funding through a mix of private placements and registered direct offerings is noteworthy in the current market context. This approach allows the company to bypass some of the volatility and regulatory hurdles associated with traditional public offerings, offering quicker access to capital.

The inclusion of milestone-linked Series Warrants is a strategic move. It aligns investor interests with the company’s clinical milestones, potentially driving the stock's value up upon successful trial outcomes. However, this also means investors are taking on substantial risk, betting on the success of DA-1726’s clinical trials.

Given the company's focus on cardiometabolic diseases, a successful DA-1726 could position NeuroBo strongly in a market with significant unmet needs. It also signals confidence from the management in their clinical pipeline. Nevertheless, market observers should remain cautious about the execution risks and the dependency on regulatory approvals and clinical trial outcomes, which are areas fraught with uncertainties.

The market's reaction to this announcement will likely hinge on how well NeuroBo communicates its progress and manages expectations around its clinical trials.

$20 million upfront with up to an additional $50 million of aggregate gross proceeds upon the exercise in full of clinical milestone-linked Series Warrants are expected to provide cash runway to complete the Phase 1 Part 3 clinical trial

CAMBRIDGE, Mass., June 25, 2024 /PRNewswire/ -- NeuroBo Pharmaceuticals, Inc. (Nasdaq: NRBO) (NeuroBo), a clinical-stage biotechnology company focused on the transformation of cardiometabolic diseases, today announced the closing of its previously announced sale in a private placement of 4,325,701 shares of its common stock (or pre-funded warrants in lieu thereof), at a purchase price of $3.93 per share (or per pre-funded warrant in lieu thereof). In a concurrent registered direct offering, NeuroBo issued and sold 763,359 shares of its common stock at the same purchase price per share as in the private placement. In addition, NeuroBo issued in the offerings unregistered Series A warrants to purchase up to 5,089,060 shares of common stock and unregistered Series B warrants to purchase up to 7,633,591 shares of common stock (all the warrants, collectively, the "Series Warrants"). The Series Warrants have an exercise price of $3.93 per share and will be exercisable beginning on the effective date of stockholder approval of the issuance of the shares upon exercise of the Series Warrants (the "Stockholder Approval"). The Series A warrants will expire on the earlier of the twelve months anniversary of the Stockholder Approval and within 60 days following the public announcement of NeuroBo receiving positive Phase 1 multiple ascending dose (MAD) data readout for DA-1726 and the Series B warrants will expire on the earlier of the five years anniversary of the Stockholder Approval and within six months following the public announcement of NeuroBo receiving positive Phase 1 Part 3 data readout for DA-1726. The private placement and the registered direct offering were priced at-the-market under Nasdaq rules.

H.C. Wainwright & Co. acted as the exclusive placement agent for the offerings.

The aggregate gross proceeds to NeuroBo from the offerings were approximately $20 million before deducting the placement agent's fees and other offering expenses payable by NeuroBo. NeuroBo currently intends to use the net proceeds from the offerings for working capital and general corporate purposes, including to continue the clinical development of DA-1726 for the treatment of obesity. The potential additional gross proceeds to NeuroBo from the Series Warrants, if fully exercised on a cash basis, will be approximately $50 million and will be utilized to fund the Phase 1 Part 3 clinical trial of DA-1726. No assurance can be given that any of the Series Warrants will be exercised.

The shares of common stock offered in the registered direct offering (but excluding the securities offered in the private placement and the shares of common stock underlying the warrants issued in the private placement) were offered and sold by NeuroBo pursuant to a "shelf" registration statement on Form S-3 (Registration No. 333-278646), including a base prospectus, previously filed with the Securities and Exchange Commission ("SEC") on April 12, 2024 and declared effective by the SEC on April 23, 2024. The offering of the shares of common stock issued in the registered direct offering were made only by means of a prospectus supplement that forms a part of the registration statement. A final prospectus supplement and an accompanying base prospectus relating to the registered direct offering were filed with the SEC and are available on the SEC's website located at http://www.sec.gov. Electronic copies of the final prospectus supplement and the accompanying base prospectus may be obtained on the SEC's website at http://www.sec.gov and may also be obtained by contacting H.C. Wainwright & Co., LLC at 430 Park Avenue, 3^rd Floor, New York, NY 10022, by phone at (212) 856-5711 or e-mail at placements@hcwco.com.

The offer and sale of the securities in the private placement and the Series Warrants described above were made in a transaction not involving a public offering and have not been registered under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act") and/or Rule 506(b) of Regulation D promulgated thereunder and, along with the shares of common stock underlying the warrants issued in the private placement, have not been registered under the Securities Act or applicable state securities laws. Accordingly, the securities in the private placement, the Series Warrants and underlying shares of common stock may not be offered or sold in the United States except pursuant to an effective registration statement with the SEC or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. NeuroBo has agreed to file an initial registration statement with the SEC covering the resale of the securities to be issued in the private placement.

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 NeuroBo Pharmaceuticals
NeuroBo Pharmaceuticals, Inc. is a clinical-stage biotechnology company focused on transforming cardiometabolic diseases. The company is currently developing DA-1726 for the treatment of obesity, and is developing DA-1241 for the treatment of Metabolic Dysfunction-Associated Steatohepatitis (MASH).  DA-1726 is a novel oxyntomodulin (OXM) analogue that functions as a glucagon-like peptide-1 receptor (GLP1R) and glucagon receptor (GCGR) dual agonist. OXM is a naturally-occurring gut hormone that activates GLP1R and GCGR, thereby decreasing food intake while increasing energy expenditure, thus potentially resulting in superior body weight loss compared to selective GLP1R agonists. DA-1241 is a novel G-protein-coupled receptor 119 (GPR119) agonist that promotes the release of key gut peptides GLP-1, GIP, and PYY. In pre-clinical studies, DA-1241 demonstrated a positive effect on liver inflammation, lipid metabolism, weight loss, and glucose metabolism, reducing hepatic steatosis, hepatic inflammation, and liver fibrosis, while also improving glucose control.

For more information, please visit www.neurobopharma.com.

Forward Looking Statements
Certain statements in this press release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believes", "expects", "anticipates", "may", "will", "should", "seeks", "approximately", "intends", "projects", "plans", "estimates" or the negative of these words or other comparable terminology (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements, which include, among other statements, statements regarding the anticipated use of proceeds from the offerings, the ability of NeuroBo to achieve certain milestone events; the exercise of the Series Warrants upon the achievement of such milestone events or otherwise prior to their expiration and the receipt of stockholder approval. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including, without limitation, market and other conditions, those risks associated with NeuroBo's ability to execute on its commercial strategy; the timeline for regulatory submissions; ability to obtain regulatory approval through the development steps of NeuroBo's current and future product candidates, the ability to realize the benefits of the license agreement with Dong-A ST Co. Ltd., including the impact on future financial and operating results of NeuroBo; the cooperation of NeuroBo's contract manufacturers, clinical study partners and others involved in the development of NeuroBo's current and future product candidates; potential negative interactions between NeuroBo's product candidates and any other products with which they are combined for treatment; NeuroBo's ability to initiate and complete clinical trials on a timely basis; NeuroBo's ability to recruit subjects for its clinical trials; whether NeuroBo receives results from NeuroBo's clinical trials that are consistent with the results of pre-clinical and previous clinical trials; impact of costs related to the license agreement, known and unknown, including costs of any litigation or regulatory actions relating to the license agreement; effects of changes in applicable laws or regulations; effects of changes to NeuroBo's stock price on the terms of the license agreement and any future fundraising; and other risks and uncertainties described in NeuroBo's filings with the Securities and Exchange Commission, including NeuroBo's most recent Annual Report on Form 10-K. Forward-looking statements speak only as of the date when made. NeuroBo does not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contacts:

NeuroBo Pharmaceuticals
Marshall H. Woodworth
Chief Financial Officer
+1-857-299-1033
marshall.woodworth@neurobopharma.com 

Rx Communications Group
Michael Miller
+1-917-633-6086
mmiller@rxir.com

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SOURCE NeuroBo Pharmaceuticals, Inc.

FAQ

What was the total gross proceeds from NeuroBo's private placement and registered direct offering?

The total gross proceeds were approximately $20 million upfront, with potential to reach up to $70 million upon full exercise of Series Warrants.

What is the purpose of the funds raised by NeuroBo Pharmaceuticals?

The funds will be used for working capital, general corporate purposes, and to continue the clinical development of DA-1726 for obesity treatment.

What are the terms of the Series Warrants issued by NeuroBo Pharmaceuticals?

Series A warrants allow purchase of up to 5,089,060 shares and Series B warrants allow purchase of up to 7,633,591 shares, both at $3.93 per share, contingent on clinical milestones.

When will the Series Warrants issued by NeuroBo Pharmaceuticals expire?

Series A warrants will expire on the earlier of 12 months post-stockholder approval or 60 days after positive Phase 1 MAD data for DA-1726. Series B warrants will expire on the earlier of 5 years post-approval or 6 months after positive Phase 1 Part 3 data for DA-1726.

Who acted as the placement agent for NeuroBo's private placement and direct offering?

H.C. Wainwright & Co. acted as the exclusive placement agent for the offerings.