Silo Pharma Announces $2 Million Registered Direct Offering Priced At-The-Market Under Nasdaq Rules

Rhea-AI Summary

Silo Pharma (Nasdaq: SILO), a developmental stage biopharmaceutical company, announced a $2 million registered direct offering of 917,432 shares of common stock at $2.18 per share, set to close on June 6, 2024. Concurrently, the company will issue unregistered warrants to purchase 917,432 shares of common stock at an exercise price of $2.06 per share. H.C. Wainwright & Co. acts as the exclusive placement agent. The proceeds will support working capital and corporate purposes. The offering is under a 'shelf' registration statement on Form S-3 effective since January 30, 2024. The warrants and underlying shares remain unregistered under the Securities Act of 1933.

Positive

• Silo Pharma raised $2 million in gross proceeds.
• Funds will support working capital and general corporate purposes.
• Offering priced at-the-market under Nasdaq rules.
• Exclusive placement agent H.C. Wainwright & Co. brings credibility.

Negative

• Potential dilution for existing shareholders with the issuance of 917,432 shares.
• Warrants issued at $2.06 may put downward pressure on stock price upon exercise.
• Gross proceeds are before deducting placement agent fees and offering expenses.
• Unregistered warrants and underlying shares are restricted, limiting liquidity.

Insights

Financial Analyst

Silo Pharma's recent financing announcement provides several important considerations for investors. First, $2 million in gross proceeds will bolster the company's working capital and fund general corporate purposes, which is essential for a developmental stage biopharmaceutical company. This injection of funds could help the company continue its research and development (R&D) activities without facing immediate liquidity concerns.

However, investors should be mindful of the potential dilution of share value. Issuing 917,432 shares at $2.18 per share and the additional warrants to purchase shares at $2.06 could dilute existing shareholders' equity. This is especially noteworthy considering the warrants are exercisable immediately and will be valid for five years, which could lead to further dilution down the line.

Additionally, the involvement of H.C. Wainwright & Co. as the exclusive placement agent underscores the seriousness of the offering and offers an element of credibility since they are a recognized name in the market.

In the short term, this offering may put downward pressure on the stock price due to dilution concerns, but in the long term, the improved liquidity and potential advancements in R&D could offer substantial growth opportunities. Investors should weigh these factors carefully, considering both the immediate dilution and the future potential of Silo Pharma's innovative therapies.

Market Research Analyst

The terms of the financing arrangement also reveal insights into the market's perception of Silo Pharma's future prospects. Pricing the shares at-the-market under Nasdaq rules reflects confidence in the current share price being fair and market-driven. This is a strategic move to avoid offering a significant discount, which would reflect negatively on investor confidence.

Moreover, the issuance of unregistered warrants in a concurrent private placement under Section 4(a)(2) of the Securities Act and Regulation D highlights the company's approach to attract sophisticated investors. These investors are likely to have a better understanding of the risks and rewards associated with investing in a developmental stage biopharmaceutical company, signaling a certain level of trust in the company's potential.

For retail investors, it's important to understand the implications of such placements. While they might not have access to the same unregistered warrants, the existence of these instruments suggests a vote of confidence from institutional or accredited investors, which can be a positive indicator.

In summary, this financing move should be interpreted as a balanced measure to secure necessary funds without overly compromising existing shareholder value. It's a nuanced strategy that reflects both the challenges and potential of Silo Pharma's market position.

SARASOTA, FL, June 05, 2024 (GLOBE NEWSWIRE) -- Silo Pharma, Inc. (Nasdaq: SILO) (“Silo” or the “Company”), a developmental stage biopharmaceutical company focused on developing novel formulations and drug delivery systems for traditional therapeutics and psychedelic treatments, today announced that it has entered into definitive agreements for the purchase and sale of 917,432 shares of common stock (or common stock equivalents in lieu thereof) at a purchase price of $2.18 per share (or per common stock equivalent in lieu thereof) in a registered direct offering priced at-the-market under Nasdaq rules. In a concurrent private placement, the Company will issue unregistered warrants to purchase up to 917,432 shares of common stock at an exercise price of $2.06 per share that will be immediately exercisable upon issuance and will expire five years following the date of issuance. The closing of the offering is expected to occur on or about June 6, 2024, subject to the satisfaction of customary closing conditions.

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

The gross proceeds to the Company from the offering are expected to be approximately $2 million before deducting placement agent fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for working capital and general corporate purposes.

The common stock (or common stock equivalents) (but not the unregistered warrants and the shares of common stock underlying the unregistered warrants) described above are being offered by the Company pursuant to a “shelf” registration statement on Form S-3 (File No. 333-276658) that was declared effective by the Securities and Exchange Commission (the “SEC”) on January 30, 2024. The offering of the shares of common stock (or common stock equivalents) is being made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement. A final prospectus supplement and accompanying prospectus relating to the registered direct offering will be filed with the SEC. Electronic copies of the final prospectus supplement and accompanying prospectus may be obtained, when available, on the SEC’s website at http://www.sec.gov or by contacting H.C. Wainwright & Co., LLC at 430 Park Avenue, 3rd Floor, New York, New York 10022, by phone at (212) 856-5711 or e-mail at placements@hcwco.com.

The unregistered warrants described above are being offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Regulation D promulgated thereunder and, along with the shares of common stock underlying such unregistered warrants, have not been registered under the Securities Act, or applicable state securities laws. Accordingly, the unregistered warrants and underlying shares of common stock 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 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 Silo Pharma

Silo Pharma Inc. (Nasdaq: SILO) is a developmental stage biopharmaceutical company developing novel therapeutics that address underserved conditions including stress-induced psychiatric disorders, chronic pain conditions, and central nervous system (CNS) diseases. Silo focuses on developing traditional therapies and psychedelic treatments in novel formulations and drug delivery systems. The Company’s lead program, SPC-15, is an intranasal treatment targeting PTSD and stress-induced anxiety disorders. SP-26 is a time-release ketamine-loaded implant for fibromyalgia and chronic pain relief. Silo’s two preclinical programs are SPC-14, an intranasal compound for the treatment of Alzheimer’s disease, and SPU-16, a CNS-homing peptide targeting multiple sclerosis (MS). Silo’s research and development programs are conducted through collaborations with Columbia University and the University of Maryland, Baltimore. For more information, visit www.silopharma.com and connect on social media at LinkedIn, X, and Facebook.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are identified by the use of words “could”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “may”, “continue”, “predict”, “potential”, and similar expressions that are intended to identify forward-looking statements. Such statements involve known and unknown risks, uncertainties, and other factors that could cause the actual results of Silo Pharma, Inc. (“Silo” or “the Company”) to differ materially from the results expressed or implied by such statements, including statements pertaining to the completion of the offering, the satisfaction of customary closing conditions related to the offering, the intended use of proceeds from the offering, changes to anticipated sources of revenues, future economic and competitive conditions, difficulties in developing the Company’s technology platforms, retaining and expanding the Company’s customer base, fluctuations in consumer spending on the Company’s products and other factors. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company disclaims any obligations to publicly update or release any revisions to the forward-looking information contained in this presentation, whether as a result of new information, future events, or otherwise, after the date of this presentation or to reflect the occurrence of unanticipated events except as required by law.

Contact

800-705-0120 investors@silopharma.com

FAQ

What is the amount raised in the Silo Pharma direct offering?

Silo Pharma raised approximately $2 million in gross proceeds.

When will the Silo Pharma direct offering close?

The offering is expected to close on or about June 6, 2024.

How many shares are involved in the Silo Pharma direct offering?

The offering involves 917,432 shares of common stock.

What is the purchase price per share in the Silo Pharma direct offering?

The purchase price is $2.18 per share.

What are the exercise terms for the Silo Pharma warrants?

The warrants are exercisable at $2.06 per share and expire five years from the issuance date.

Who is acting as the placement agent for the Silo Pharma offering?

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

How will Silo Pharma use the proceeds from the offering?

The proceeds will be used for working capital and general corporate purposes.

Are the warrants issued by Silo Pharma registered?

No, the warrants and the underlying shares are unregistered under the Securities Act of 1933.

Under what rules was the Silo Pharma offering priced?

The offering was priced at-the-market under Nasdaq rules.

What document governs the Silo Pharma offering?

The offering is made under a 'shelf' registration statement on Form S-3 effective January 30, 2024.