PRINCETON, N.J. - Sonnet BioTherapeutics Holdings, Inc. (NASDAQ:SONN), a clinical-stage biotechnology company, announced today an agreement for the immediate exercise of warrants issued in October 2023.
These warrants allow the purchase of up to 2,828,500 shares of common stock at a reduced price of $1.20 per share. The transaction is set to close around June 21, 2024, contingent upon customary closing conditions.
In a strategic move to generate capital, Sonnet has also decided to issue new unregistered warrants for the purchase of up to 5,657,000 shares at $1.55 per share, which will be exercisable upon issuance and valid for five years from the date of issuance.
The company has adjusted the terms of the existing warrants for non-participating holders and certain outstanding warrants from June 2023, aligning their exercise prices and extending their terms to match those of the new warrants.
The anticipated gross proceeds from the exercise of the existing warrants are projected to be around $3.4 million, before accounting for fees and expenses. Ladenburg Thalmann & Co. Inc. is serving as the exclusive placement agent for this offering.
Sonnet intends to allocate the net proceeds towards its research and development efforts, including clinical trials, as well as for working capital, repaying liabilities, and other corporate purposes.
The new warrants were offered in a private placement under an exemption from the registration requirements of the Securities Act of 1933, and they, along with the shares of common stock issuable upon exercise, have not been registered under the Act. The company has committed to filing a registration statement with the SEC for the resale of the shares of common stock from 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. There can be no assurance that the securities in the offering will be sold or that the offering will be completed.
Sonnet BioTherapeutics specializes in developing targeted immunotherapeutic drugs, leveraging its proprietary FHAB (Fully Human Albumin Binding) technology designed to enhance the delivery and efficacy of biologic drugs. The company is focused on advancing treatments for oncological diseases.
The information provided in this article is based on a press release statement from Sonnet BioTherapeutics Holdings, Inc.
InvestingPro Insights
In light of Sonnet BioTherapeutics Holdings, Inc.'s (NASDAQ:SONN) recent strategic financial maneuvers, it is crucial to consider the company's financial health and market position. InvestingPro data reveals a market capitalization of approximately $4.76 million USD, which positions SONN as a smaller player within the biotechnology sector. This is particularly relevant as the company seeks to expand its research and development efforts.
An analysis of the company's performance metrics shows a significant revenue decline over the last twelve months as of Q2 2024, with a decrease of 53.29%. Moreover, Sonnet has reported a gross profit margin of -7517.12%, indicating substantial costs exceeding revenues, which aligns with the company's current non-profitable status. These figures underscore the importance of the proceeds from the exercise of the warrants and the issuance of new warrants to bolster the company's financial runway.
InvestingPro Tips provide further context to the company's situation, noting that Sonnet holds more cash than debt, which can be a positive indicator of its ability to manage short-term obligations. Still, the company has faced significant price declines, with the stock taking a considerable hit over the last week, and a one-year total price return as of the current date showing an -89.72% drop. This performance may raise concerns among investors about the company's long-term growth potential.
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The insights provided by InvestingPro are particularly relevant as Sonnet BioTherapeutics navigates the competitive and capital-intensive landscape of biotech innovation, emphasizing the importance of financial strategy and market perception in the company's quest to bring novel therapies to market.
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