Onconetix Announces Closing of Warrant Exercise for $1.11 Million Gross Proceeds

Rhea-AI Summary

Onconetix (Nasdaq: ONCO) has closed the previously announced exercise of existing warrants, raising $1.11 million in gross proceeds. The company issued 7,458,642 shares of common stock at a reduced exercise price of $0.15 per share. In exchange, Onconetix issued new unregistered warrants to purchase up to 22,375,926 shares of common stock in a private placement.

The new warrants have an exercise price of $0.15 per share and are subject to stockholder approval. One-third of the warrants have a 5-year term, while two-thirds have a 24-month term from the date of stockholder approval. H.C. Wainwright acted as the exclusive placement agent for this transaction.

Positive

• Raised $1.11 million in gross proceeds through warrant exercise
• Issued new warrants with potential for additional future funding

Negative

• Reduced warrant exercise price from $1.09-$2.546 to $0.15 per share
• New warrants subject to stockholder approval
• Potential dilution from new warrant issuance

Financial Analyst

Onconetix's recent announcement about the warrant exercise and the issuance of new warrants is a significant event for the company and its investors. The company raised $1.11 million by reducing the exercise price of existing warrants, likely to incentivize warrant holders to convert them to shares. This strategy provides Onconetix with immediate cash infusion, beneficial for addressing its working capital needs and general corporate purposes.

The decision to issue new warrants in exchange for immediate cash exercise of existing warrants highlights a typical approach for companies seeking quick liquidity without issuing new shares directly to the market. However, issuing new warrants with a low exercise price of $0.15 raises potential concerns about future dilution. With up to 22,375,926 new shares potentially entering the market, existing shareholders might see their ownership percentage decrease if these warrants are exercised.

This move indicates the company's urgent need for funds, a point of caution for investors. Moreover, the requirement for stockholder approval for the new warrants to become exercisable introduces an element of uncertainty. While raising funds in this manner can help manage short-term liquidity, it may also signal that traditional financing routes are challenging for the company at this time.

Investors should monitor how effectively Onconetix utilizes the raised funds and whether it can achieve significant milestones or improvements in its financial health. The broader market sentiment towards the company's future performance will be influenced by its ability to generate revenues and manage expenses efficiently in the coming quarters.

Legal Expert

The legal framework surrounding this warrant exercise and subsequent issuance of new warrants is intricate but standard for such financial maneuvers. The transaction's compliance with the Securities Act of 1933, specifically Section 4(a)(2), ensures that the new warrants are exempt from registration requirements, which expedites the process. However, this also means the new warrants are unregistered, limiting their immediate liquidity and tradability in the market.

The agreement to file a resale registration statement on Form S-3 is a strategic step to enhance future liquidity for warrant holders, allowing them to sell the shares acquired upon exercise of the new warrants. This move is important for maintaining investor confidence, especially given the large number of shares involved.

Investors should be aware of the legal stipulations, particularly the need for stockholder approval before the new warrants become exercisable. This adds a layer of governance and oversight, ensuring that the existing shareholder base has a say in any potential dilution. The different terms for the exercisable period (five years for one-third and twenty-four months for the remaining two-thirds) also bring in a staggered approach to potential dilution, which might stabilize the impact on the stock price over time.

Understanding these legal nuances helps investors gauge the potential timing and scale of market impacts due to new share issuances and the company's legal preparedness in handling such financial instruments.

CINCINNATI, July 15, 2024 (GLOBE NEWSWIRE) -- Onconetix, Inc. (“Onconetix” or the “Company”) (Nasdaq: ONCO), today announced the closing of the previously announced exercise of certain existing warrants to purchase 7,458,642 shares of its common stock having exercise prices ranging from $1.09 to $2.546 per share, at a reduced exercise price of $0.15 per share. The aggregate gross proceeds from the exercise of the existing warrants were approximately $1.11 million, before deducting placement agent fees and other offering expenses payable by the Company.

H.C. Wainwright acted as the exclusive placement agent for this transaction.

The Company expects to use the net proceeds from the transaction for working capital and general corporate purposes.

The shares of common stock issued upon exercise of the existing warrants are registered pursuant to an existing registration statement on a Form S-1 (File No. 333-277066), declared effective by the Securities and Exchange Commission (the “SEC”) on July 1, 2024.

In consideration for the immediate exercise of the existing warrants for cash, the Company issued new unregistered warrants to purchase up to an aggregate of 22,375,926 shares of common stock in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”). The shares of common stock issuable upon exercise of the new warrants are subject to stockholder approval and the new warrants will become exercisable on the effective date of the stockholder approval. The new warrants have an exercise price of $0.15 per share. One-third of the new warrants have a term of exercise equal to five years from the date of stockholder approval, and the remaining two-thirds have a term of exercise equal to twenty-four months from the date of stockholder approval.

The new warrants offered in the private placement have not been registered under the 1933 Act, or applicable under state securities laws. Accordingly, the new warrants and shares of common stock issuable upon the exercise of the new warrants 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 1933 Act and such applicable state securities laws. As part of the offering, the Company has agreed to file a resale registration statement on Form S-3 with the SEC as soon as practicable to register the resale of the shares of common stock issuable upon the exercise of the new warrants issued in the private placement.

This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

About Onconetix, Inc.

Onconetix, Inc. is a commercial-stage biotechnology company focused on the research, development, and commercialization of innovative solutions for men’s health and oncology. Through its recent acquisition of Proteomedix AG (“Proteomedix”), the Company owns Proclarix, an in vitro diagnostic test for prostate cancer originally developed by Proteomedix and approved for sale in the European Union under the In Vitro Diagnostic Regulation, which the Company anticipates will be marketed in the U.S. as a lab developed test through its license agreement with Labcorp. The Company also owns ENTADFI, an FDA-approved, once daily pill that combines finasteride and tadalafil for the treatment of benign prostatic hyperplasia, a disorder of the prostate.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words such as “anticipate,” “believe,” “forecast,” “estimate,” “expect,” and “intend,” among others. These forward-looking statements (including, without limitation, statements regarding the receipt of stockholder approval, the intended use of proceeds from the offering, and the anticipated results of the Company’s sales and marketing efforts for its commercial stage products as described herein) are based on Onconetix’s current expectations and actual results could differ materially. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, market and other conditions; risks related to Onconetix’s ability to commercialize or monetize ENTADFI and Proclarix and integrate the assets and commercial operations acquired in the share exchange with Proteomedix; risks related to the Company’s present need for capital to commercially launch the Company’s acquired products and have adequate working capital; risks related to Onconetix’s ability to attract, hire and retain skilled personnel necessary to commercialize and operate the company’s commercial products; the failure to obtain and maintain the necessary regulatory approvals to market and commercialize Onconetix’s products; risks related to the Company’s ability to obtain and maintain intellectual property protection for its current products; and the Company’s reliance on third parties, including manufacturers and logistics companies. As with any commercial-stage pharmaceutical product or any product candidate under clinical development, there are significant risks in the development, regulatory approval and commercialization of biotechnology products. Onconetix does not undertake an obligation to update or revise any forward-looking statement. Investors should read the risk factors set forth in Blue Water’s Annual Report on Form 10-K, filed with the SEC on April 11, 2024 and periodic reports filed with the SEC on or after the date thereof. All of Onconetix’s forward-looking statements are expressly qualified by all such risk factors and other cautionary statements. The information set forth herein speaks only as of the date thereof.

Investor Contact Information:
Onconetix Investor Relations
Email: investors@onconetix.com

FAQ

How much did Onconetix (ONCO) raise through the warrant exercise?

Onconetix (ONCO) raised approximately $1.11 million in gross proceeds through the exercise of existing warrants.

What was the reduced exercise price for Onconetix (ONCO) warrants?

The reduced exercise price for Onconetix (ONCO) warrants was $0.15 per share, down from the original range of $1.09 to $2.546 per share.

How many new warrants did Onconetix (ONCO) issue in the private placement?

Onconetix (ONCO) issued new unregistered warrants to purchase up to 22,375,926 shares of common stock in a private placement.

What are the terms of the new warrants issued by Onconetix (ONCO)?

The new warrants have an exercise price of $0.15 per share. One-third have a 5-year term, and two-thirds have a 24-month term from the date of stockholder approval.