Sonnet BioTherapeutics Announces Exercise of Warrants for $3.4 Million in Gross Proceeds
Sonnet BioTherapeutics (NASDAQ: SONN), a clinical-stage company, has announced the exercise of certain outstanding warrants resulting in gross proceeds of $3.4 million. The agreement involves the immediate exercise of warrants for 2,828,500 shares at a reduced price of $1.20 per share, effective June 21, 2024. Ladenburg Thalmann & Co. Inc. is the exclusive placement agent. In return for immediate exercise, Sonnet will issue new unregistered warrants for 5,657,000 shares at $1.55 per share, exercisable immediately and valid for five years. Additional adjustments include reduced exercise prices for other outstanding warrants and an extension of their terms. The funds will be used for R&D, clinical trials, working capital, and general corporate purposes.
- Immediate exercise of warrants brings $3.4 million in gross proceeds.
- New unregistered warrants for 5,657,000 shares priced at $1.55 each.
- Funds allocated for research and development, clinical trials, working capital, and general corporate purposes.
- Reduction in exercise price of existing warrants may indicate lower investor confidence.
- Issuance of new warrants could lead to potential shareholder dilution.
Insights
Sonnet BioTherapeutics' announcement regarding the exercise of warrants for gross proceeds of
This move also indicates confidence from warrant holders in the company's future prospects, which could be viewed positively by the market. However, the issuance of new warrants does lead to potential dilution of existing shareholders' equity. Investors should weigh the immediate financial benefits against the long-term dilutive effects.
From a broader perspective, this financing strategy aligns with industry norms for biotech companies, where warrant exercises are a common mechanism for raising funds. The critical element for investors will be to monitor how effectively Sonnet utilizes these funds to advance its pipeline and whether this capital translates into meaningful clinical progress or partnerships that could drive future value.
The issuance and exercise of these warrants provide insightful data points on investor sentiment and market demand for Sonnet BioTherapeutics' shares. The fact that the company was able to secure immediate exercise of warrants reflects positively on the underlying confidence of investors in the company’s trajectory and its current valuation.
Moreover, the decision to reduce the exercise price for non-participating warrant holders to
Investors should also consider the broader competitive landscape in the biotech sector. Similar fundraising activities by peer companies might indicate strong investor appetite in this space, potentially positioning Sonnet favorably if it continues to demonstrate progress in its clinical pipeline.
It's worth noting that the new warrants and their terms—exercisable upon issuance with a five-year term—may indicate the company's long-term view and commitment to sustained growth.
From a legal perspective, the transaction highlights Sonnet BioTherapeutics' adherence to regulatory requirements, including the use of Form S-1 for the registration of shares and compliance with the Securities Act of 1933. The exemption from the registration requirements for the new warrants is a standard legal strategy to streamline the process and reduce associated costs.
Additionally, the company's commitment to file a registration statement with the SEC for the resale of shares issued upon the exercise of new warrants demonstrates transparency and foresight in facilitating future liquidity for warrant holders. This proactive approach aligns with best practices in corporate governance, potentially enhancing shareholder trust.
However, investors must be mindful of the legal complexities and risks associated with such financial instruments and remain vigilant about any potential regulatory changes that could impact warrant valuation or exercise conditions.
PRINCETON, N.J., June 20, 2024 (GLOBE NEWSWIRE) -- Sonnet BioTherapeutics Holdings, Inc. (NASDAQ:SONN) (the “Company” or “Sonnet”), a clinical-stage company developing targeted immunotherapeutic drugs, announced today the entry into a definitive agreement for the immediate exercise of certain outstanding warrants to purchase up to an aggregate of 2,828,500 shares of common stock, issued by Sonnet in October 2023 (the “Existing Warrants”), at a reduced exercise price of
Ladenburg Thalmann & Co. Inc. is acting as the exclusive placement agent for the offering.
In consideration for the immediate exercise of the Existing Warrants for cash, Sonnet will issue new unregistered warrants to purchase up to 5,657,000 shares of common stock (the “New Warrants”). The New Warrants will have an exercise price of
The gross proceeds to Sonnet from the exercise of the Existing Warrants are expected to be approximately
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 shares of common stock issuable upon 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 ("SEC") or an applicable exemption from such registration requirements. Sonnet has agreed to file a registration statement with the SEC covering the resale of the shares of common stock issuable upon exercise of the New Warrants.
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 Sonnet BioTherapeutics Holdings, Inc.
Sonnet BioTherapeutics is an oncology-focused biotechnology company with a proprietary platform for innovating biologic drugs of single or bifunctional action. Known as FHAB (Fully Human Albumin Binding), the technology utilizes a fully human single chain antibody fragment (scFv) that binds to and "hitch-hikes" on human serum albumin (HSA) for transport to target tissues. Sonnet's FHAB was designed to specifically target tumor and lymphatic tissue, with an improved therapeutic window for optimizing the safety and efficacy of immune modulating biologic drugs. FHAB is the foundation of a modular, plug-and-play construct for potentiating a range of large molecule therapeutic classes, including cytokines, peptides, antibodies, and vaccines.
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and Private Securities Litigation Reform Act, as amended, including those relating to the outcome of the Company’s clinical trials, the Company's cash runway, the Company's product development, clinical and regulatory timelines, market opportunity, competitive position, possible or assumed future results of operations, business strategies, potential growth opportunities and other statements that are predictive in nature. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate and management's current beliefs and assumptions.
These statements may be identified by the use of forward-looking expressions, including, but not limited to, "expect," "anticipate," "intend," "plan," "believe," "estimate," "potential, "predict," "project," "should," "would" and similar expressions and the negatives of those terms. These statements relate to future events or our financial performance and involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include those set forth in the Company's filings with the Securities and Exchange Commission. Prospective investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
Sonnet BioTherapeutics Investor Contact
Jack Yauch
Solebury Strategic Communications
862-754-1024
jyauch@soleburystrat.com
Source: Sonnet BioTherapeutics Holdings, Inc.
Released June 20, 2024
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