XORTX Announces Closing of US$1.5 Million Registered Direct Offering and Concurrent Private Placement

Rhea-AI Summary

XORTX Therapeutics Inc. (NASDAQ: XRTX | TSXV: XRTX | Frankfurt: ANU) has closed its previously announced US$1.5 million registered direct offering and concurrent private placement. The offering included the sale of 810,810 common shares (or pre-funded warrants) at US$1.85 per share and common warrants to purchase up to 810,810 common shares. The warrants have an exercise price of US$2.18, are immediately exercisable, and expire in five years.

A.G.P./Alliance Global Partners acted as the sole placement agent. The company plans to use the net proceeds for working capital and general corporate purposes. The common shares were offered through an effective shelf registration statement, while the private placement of warrants was made under exemptions from registration requirements.

Positive

• Successful closing of US$1.5 million offering
• Immediate access to additional capital for working capital and corporate purposes
• Potential for additional funding if warrants are exercised

Negative

• Potential dilution of existing shareholders
• Warrants issued at a lower price than current market value
• Additional expenses related to placement agent fees and offering costs

Insights

Financial Analyst

The closing of XORTX Therapeutics' $1.5 million registered direct offering and concurrent private placement is a significant development for this micro-cap biotech company. With a market cap of just $5.78 million, this capital raise represents a substantial 26% increase in available funds.

The offering structure, combining common shares (or pre-funded warrants) with warrants, is typical for small biotech firms seeking to maximize capital while offering potential upside to investors. The $1.85 per share price and $2.18 warrant exercise price suggest some confidence in near-term value creation.

However, investors should note that this financing will likely result in significant dilution for existing shareholders. The company's intent to use proceeds for working capital and general corporate purposes, rather than specific R&D milestones, may indicate ongoing cash burn concerns.

While the additional capital provides a short-term runway, XORTX will need to demonstrate meaningful progress in its kidney disease therapies to justify its valuation and potentially raise more capital in the future. The involvement of A.G.P./Alliance Global Partners as placement agent lends some credibility to the offering, but also highlights the challenges small biotechs face in accessing capital markets.

Medical Research Analyst

XORTX Therapeutics' focus on developing innovative therapies for progressive kidney disease positions it in a critical and growing medical field. Chronic kidney disease affects millions globally, with treatment options available, making this an area ripe for innovation.

The $1.5 million raised, while modest in the context of drug development costs, could be important for advancing the company's late-stage clinical programs. However, without specific allocation details, it's unclear how impactful this funding will be on accelerating their research pipeline.

Investors should closely monitor upcoming clinical milestones and data readouts, as these will be critical in assessing the potential of XORTX's therapies and the company's ability to compete in the nephrology space. The success of their lead candidates could significantly impact the company's valuation and future financing options.

Given the company's small size and the competitive nature of biotech R&D, XORTX faces significant challenges. The ability to efficiently utilize this new capital to generate meaningful clinical progress will be important for the company's long-term prospects and potential partnerships or acquisitions in the renal therapeutics market.

CALGARY, Alberta, Oct. 18, 2024 (GLOBE NEWSWIRE) -- XORTX Therapeutics Inc. ("XORTX" or the “Company”) (NASDAQ: XRTX | TSXV: XRTX | Frankfurt: ANU), a late-stage clinical pharmaceutical company focused on developing innovative therapies to treat progressive kidney disease, today announced that it has closed its registered direct offering and concurrent private placement, announced on October 17, 2024, for the purchase and sale of 810,810 common shares (or pre-funded warrants in lieu thereof) in a registered direct offering and common warrants to purchase up to 810,810 common shares in a concurrent private placement (together with the registered direct offering, the “Offering”) at a combined purchase price of US$1.85 per common share. The common warrants issued pursuant to the concurrent private placement have an exercise price of US$2.18, are immediately exercisable and expire five years from issuance.

The gross proceeds from the Offering were approximately US$1.5 million, excluding any proceeds that may be received upon the exercise of the common warrants, 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.

A.G.P./Alliance Global Partners acted as sole placement agent for the Offering.

The common shares (and pre-funded warrants in lieu thereof) were issued in a registered direct offering pursuant to an effective shelf registration statement on Form F-3 (File No. 333-269429) previously filed with the U.S. Securities and Exchange Commission (the “SEC”), under the Securities Act of 1933, as amended (the “Securities Act”), and declared effective by the SEC on February 3, 2023. A prospectus supplement describing the terms of the proposed registered direct offering was filed with the SEC and is available on the SEC’s website located at http://www.sec.gov. Electronic copies of the prospectus supplement may be obtained from A.G.P./Alliance Global Partners, 590 Madison Avenue, 28th Floor, New York, NY 10022, or by telephone at (212) 624-2060, or by email at prospectus@allianceg.com.

The private placement of the common warrants and the underlying common shares was made in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act and Regulation D thereunder. Accordingly, the securities issued in the concurrent private placement 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 applicable state securities laws.

This press release shall not constitute an offer to sell or the 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 registration or qualification under the securities laws of any such state or jurisdiction.

About XORTX Therapeutics Inc.

XORTX is a pharmaceutical company with two clinically advanced products in development: 1) our lead, XRx-008 program for ADPKD; and 2) our secondary program in XRx-101 for acute kidney and other acute organ injury associated with Coronavirus / COVID-19 infection. In addition, XRx-225 is a pre-clinical stage program for Type 2 Diabetic Nephropathy. XORTX is working to advance its clinical development stage products that target aberrant purine metabolism and xanthine oxidase to decrease or inhibit production of uric acid.

For more information, please contact:

Allen Davidoff, CEO	Nick Rigopulos, Director of Communications
adavidoff@xortx.com or +1 403 455 7727	nick@alpineequityadv.com or +1 617 901 0785

Neither the TSX Venture Exchange nor Nasdaq has approved or disapproved the contents of this news release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

Forward Looking Statements

This press release contains express or implied forward-looking statements pursuant to applicable securities laws. For example, the Company is using forward-looking statement in this press release when it discusses the intended use of proceeds from the Offering. These forward-looking statements and their implications are based on the current expectations of the management of XORTX only, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Except as otherwise required by applicable law and stock exchange rules, XORTX undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. More detailed information about the risks and uncertainties affecting XORTX is contained under the heading “Risk Factors” in XORTX’s Annual Report on Form 20-F filed with the SEC, which is available on the SEC's website, www.sec.gov (including any documents forming a part thereof or incorporated by reference therein), as well as in our reports, public disclosure documents and other filings with the securities commissions and other regulatory bodies in Canada, which are available on www.sedarplus.ca.

FAQ

What was the size of XORTX Therapeutics' (XRTX) recent offering?

XORTX Therapeutics (XRTX) closed a US$1.5 million registered direct offering and concurrent private placement on October 18, 2024.

What was the purchase price per share in XORTX's (XRTX) recent offering?

The combined purchase price was US$1.85 per common share (or pre-funded warrant) in XORTX's (XRTX) recent offering.

What are the terms of the warrants issued in XORTX's (XRTX) private placement?

The common warrants issued in XORTX's (XRTX) private placement have an exercise price of US$2.18, are immediately exercisable, and expire five years from issuance.

How does XORTX (XRTX) plan to use the proceeds from the recent offering?

XORTX (XRTX) intends to use the net proceeds from the offering for working capital and general corporate purposes.