PainReform Announces Exercise of Warrants for $1.58 Million Gross Proceeds

Rhea-AI Summary

PainReform (Nasdaq: PRFX), a clinical-stage pharmaceutical company, has announced agreements for the immediate exercise of outstanding warrants. These warrants, originally issued in December 2023 and April 2024, will purchase up to 989,300 ordinary shares at a reduced price of $1.60 per share, down from the original $4.80. The offering is expected to close around September 11, 2024.

In exchange for this exercise, PainReform will issue new unregistered warrants for up to 1,978,600 ordinary shares, exercisable immediately at $1.60 per share and expiring in five years. The company anticipates gross proceeds of approximately $1.58 million from this transaction, which will be used for general corporate purposes. H.C. Wainwright & Co. is acting as the exclusive placement agent for this offering.

Positive

• Immediate cash injection of $1.58 million through warrant exercise
• Reduced warrant exercise price from $4.80 to $1.60 per share, potentially encouraging more exercises
• Issuance of new warrants with a five-year expiration, providing long-term potential for additional capital

Negative

• Potential dilution of existing shareholders due to new share issuance
• Reduced exercise price indicates possible financial pressure or unfavorable market conditions
• New warrants may lead to further dilution if exercised in the future

Insights

Financial Analyst

PainReform's warrant exercise deal is a double-edged sword. On the positive side, it secures $1.58 million in immediate capital, boosting the company's liquidity. However, this comes at the cost of significant dilution, with 989,300 new shares being issued at a 66.67% discount to the original warrant price. The issuance of additional warrants for 1,978,600 shares at the same reduced price further amplifies potential future dilution. This move suggests cash flow pressures, as the company is willing to accept unfavorable terms for quick capital. Investors should closely monitor PainReform's burn rate and pipeline progress to assess if this funding will be sufficient for near-term operations.

Legal Expert

The warrant exercise agreement raises some regulatory considerations. While the original warrants were registered, the new warrants are unregistered and subject to resale restrictions under the Securities Act. PainReform's commitment to file a registration statement for the new warrant shares is important for future liquidity. The involvement of H.C. Wainwright as placement agent and the specific mention of exemptions from registration requirements indicate compliance with SEC regulations. However, the rapid turnaround from agreement to expected closing (24 hours) is unusually quick, potentially raising questions about the depth of due diligence conducted. Investors should be aware of the risks associated with unregistered securities and monitor the timely filing of the promised registration statement.

TEL AVIV, Israel, Sept. 10, 2024 (GLOBE NEWSWIRE) -- PainReform Ltd. (Nasdaq: PRFX) ("PainReform" or the "Company"), a clinical-stage specialty pharmaceutical company focused on the reformulation of established therapeutics, today announced the entry into definitive agreements for the immediate exercise of certain outstanding warrants to purchase up to an aggregate of 989,300 ordinary shares of the Company originally issued in December 2023 and April 2024, having an exercise price of $4.80 per share, at a reduced exercise price of $1.60 per share. The ordinary shares issuable upon exercise of the warrants are registered pursuant to effective registration statements on Form F-3 (File No. 333-276485) and Form F-1 (File No. 333-277594). The offering is expected to close on or about September 11, 2024, subject to satisfaction of customary closing conditions.

H.C. Wainwright & Co. is acting as the exclusive placement agent for the offering.

In consideration for the immediate exercise of the warrants for cash, the Company will issue new unregistered warrants to purchase up to 1,978,600 ordinary shares. The new warrants will have an exercise price of $1.60 per share, will be exercisable immediately upon issuance and will expire five years from the date of issuance.

The gross proceeds to the Company from the exercise of the warrants are expected to be approximately $1.58 million, prior to deducting placement agent fees and estimated offering expenses. The Company intends to use the net proceeds from the offering for 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 ordinary shares 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 (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 ordinary shares 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 other jurisdiction.

About PainReform

PainReform is a clinical-stage specialty pharmaceutical company focused on the reformulation of established therapeutics. PRF-110, the Company's lead product, is based on the local anesthetic ropivacaine, targeting the postoperative pain relief market. PRF-110 is an oil-based, viscous, clear solution that is deposited directly into the surgical wound bed prior to closure to provide localized and extended postoperative analgesia. The Company's proprietary extended-release drug-delivery system is designed to provide an extended period of post-surgical pain relief without the need for repeated dose administration while reducing the potential need for the use of opiates. For more information, please visit www.painreform.com.

Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements about our expectations, beliefs and intentions including with respect to objectives, plans and strategies and expected timing of results. Forward-looking statements can be identified by the use of forward-looking words such as "believe", "expect", "intend", "plan", "may", "should", "could", "might", "seek", "target", "will", "project", "forecast", "continue" or "anticipate" or their negatives or variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical matters. For example, the Company is using forward-looking statements when it discusses the timing and completion of the offering, the satisfaction of customary closing conditions related to the offering and the intended use of proceeds therefrom. These forward-looking statements are based on assumptions and assessments made in light of management's experience and perception of historical trends, current conditions, expected future developments and other factors believed to be appropriate. Forward-looking statements in this press release are made as of the date of this press release, and we undertake no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of our control. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the following: our ability to continue as a going concern, our history of significant losses, our need to raise additional capital and our ability to obtain additional capital on acceptable terms, or at all; our dependence on the success of our initial product candidate, PRF-110; the outcomes of preclinical studies, clinical trials and other research regarding PRF-110 and future product candidates; our limited experience managing clinical trials; our ability to retain key personnel and recruit additional employees; our reliance on third parties for the conduct of clinical trials, product manufacturing and development; the impact of competition and new technologies; our ability to comply with regulatory requirements relating to the development and marketing of our product candidates; commercial success and market acceptance of our product candidates; our ability to establish sales and marketing capabilities or enter into agreements with third parties and our reliance on third party distributors and resellers; our ability to establish and maintain strategic partnerships and other corporate collaborations; the implementation of our business model and strategic plans for our business and product candidates; the scope of protection we are able to establish and maintain for intellectual property rights and our ability to operate our business without infringing the intellectual property rights of others; the overall global economic environment; our ability to develop an active trading market for our ordinary shares and whether the market price of our ordinary shares is volatile; and statements as to the impact of the political and security situation in Israel on our business, including due to the current war between Israel and Hamas. More detailed information about the risks and uncertainties affecting us is contained under the heading "Risk Factors" included in the Company's most recent Annual Report on Form 20-F and in other filings that we have made and may make with the Securities and Exchange Commission in the future.

Crescendo Communications, LLC
Tel: 212-671-1021
Email: prfx@crescendo-ir.com 

Dr. Ehud Geller
Chairman and interim Chief Executive Officer
PainReform Ltd.
Tel: +972-54-4236711
Email: egeller@medicavp.com 

FAQ

What is the expected gross proceeds for PainReform (PRFX) from the warrant exercise?

PainReform (PRFX) expects to receive gross proceeds of approximately $1.58 million from the exercise of the warrants, before deducting placement agent fees and estimated offering expenses.

How many new warrants will PainReform (PRFX) issue in this transaction?

PainReform (PRFX) will issue new unregistered warrants to purchase up to 1,978,600 ordinary shares as part of this transaction.

What is the exercise price of the new warrants issued by PainReform (PRFX)?

The new warrants issued by PainReform (PRFX) will have an exercise price of $1.60 per share.

When is the expected closing date for PainReform's (PRFX) warrant exercise offering?

The offering is expected to close on or about September 11, 2024, subject to satisfaction of customary closing conditions.