Sonnet BioTherapeutics Announces Pricing of $5.0 Million Underwritten Public Offering Priced At-The-Market Under Nasdaq Rules

Rhea-AI Summary

Sonnet BioTherapeutics (NASDAQ: SONN) has announced the pricing of an underwritten public offering of 1,111,111 shares of common stock and common warrants. The offering includes common warrants to purchase up to 2,222,222 additional shares. Each share is being sold with one common warrant at a combined price of $4.50, for total gross proceeds of approximately $5.0 million. The common warrants are exercisable for five years at $4.50 per share. The offering is expected to close around November 7, 2024. The proceeds will be used for research and development, clinical trials, working capital, liability repayment, and general corporate purposes.

Positive

• Secured $5.0 million in gross proceeds through public offering
• Funds will support research, development, and clinical trials
• Opportunity to reduce company liabilities through proceeds

Negative

• Potential dilution for existing shareholders through new share issuance
• Additional dilution possible if warrants are exercised
• At-the-market pricing indicates possible pressure on stock value

Insights

Financial Analyst

This $5.0 million public offering represents significant dilution for existing shareholders, with 1,111,111 shares being offered at $4.50 per share along with warrants that could lead to further dilution. The pricing "at-the-market" suggests weak demand, while the inclusion of warrants for up to 2,222,222 additional shares at the same price point indicates potential future pressure on the stock price. The company's intent to use proceeds for R&D and debt repayment is standard for clinical-stage biotech firms, but the relatively small raise may only provide runway. Key concerns include: the warrant coverage ratio of 2:1, the immediate dilutive impact and the possibility of warrant exercises creating additional selling pressure. This financing, while providing needed capital, comes at a significant cost to shareholder value.

PRINCETON, NJ, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Sonnet BioTherapeutics Holdings, Inc. (the "Company" or "Sonnet”) (NASDAQ: SONN), a clinical-stage company developing innovative targeted immunotherapeutic drugs, today announced the pricing of an underwritten public offering of 1,111,111 shares of common stock (or pre-funded warrants to purchase shares of common stock in lieu of shares of common stock) and common warrants to purchase up to an aggregate of 2,222,222 shares of common stock. Each share of common stock (or pre-funded warrant in lieu thereof) is being sold together with one common warrant at a combined offering price of $4.50, priced at-the-market under the rules of the Nasdaq Stock Market, for total gross proceeds of approximately $5.0 million, before underwriting discounts and commissions and offering expenses payable by Sonnet. Each common warrant is exercisable for two shares of common stock at an exercise price of $4.50 per share for a period of five years from the date of issuance. The offering is expected to close on or about November 7, 2024, subject to the satisfaction or waiver of customary closing conditions.

Chardan is acting as the underwriter in connection with the offering.

Sonnet anticipates using the net proceeds from the offering for research and development, including clinical trials, working capital, the repayment of all or a portion of Sonnet’s liabilities, and general corporate purposes.

The securities will be offered pursuant to a registration statement on Form S-1, as amended (File No. 333-282850), which was declared effective by the Securities and Exchange Commission (the "SEC") on November 6, 2024. The offering is being made solely by means of a prospectus. A preliminary prospectus relating to and describing the terms of the offering has been filed with the SEC and is available on the SEC's website at www.sec.gov. Copies of the preliminary prospectus and, when available, copies of the final prospectus relating to this offering can be obtained at the SEC's website at www.sec.gov or from Chardan Capital Markets, LLC, 17 State Street, Suite 2130, New York, New York 10004, at (646) 465-9000, or by email at prospectus@chardan.com.

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

About Sonnet

Sonnet is an oncology-focused biotechnology company with a proprietary platform for developing targeted biologic drugs with single or bifunctional action. Known as F_HAB (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 F_HAB 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. F_HAB platform 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 underwritten public offering, the amount and anticipated use of proceeds from the offering, 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 the Company operates 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 the Company's 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 market conditions and the satisfaction of customary closing conditions related to the offering and those set forth in the Company's filings with the SEC. 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.

Investor Relations Contact:
JTC Team, LLC
Jenene Thomas
908-824-0775
SONN@jtcir.com

Released November 6, 2024

FAQ

What is the size of Sonnet BioTherapeutics' (SONN) November 2024 public offering?

Sonnet BioTherapeutics' public offering consists of 1,111,111 shares of common stock and warrants to purchase up to 2,222,222 additional shares, with total gross proceeds of approximately $5.0 million.

What is the pricing of SONN's November 2024 public offering?

The combined offering price is $4.50 per share of common stock (or pre-funded warrant) with one common warrant, priced at-the-market under Nasdaq rules.

How will Sonnet BioTherapeutics use the proceeds from its November 2024 offering?

Sonnet plans to use the net proceeds for research and development, clinical trials, working capital, repayment of liabilities, and general corporate purposes.

What are the terms of SONN's warrants in the November 2024 offering?

The common warrants are exercisable for two shares of common stock at $4.50 per share for a period of five years from the date of issuance.