LOS ANGELES, CA – Kairos Pharma, Ltd. (NYSE American: KAPA), a pharmaceutical company specializing in the development of medical preparations, announced today that it has entered into a securities purchase agreement with accredited investors to raise $3.5 million in gross proceeds before fees and expenses. The funds are being raised through a private investment in public equity (PIPE) transaction.
According to InvestingPro data, Kairos currently maintains a market capitalization of $27.36 million and has demonstrated strong financial discipline with more cash than debt on its balance sheet. The company's stock has shown remarkable momentum, gaining 42% in the past week.
Under the terms of the agreement, Kairos Pharma will issue 2,500,000 common units at $1.40 each, with each unit consisting of one common share and one warrant to purchase one and a half additional common shares.
Moreover, the company will issue pre-funded units, which include a pre-funded warrant to purchase one common share and one and a half common share purchase warrants. The offering price represents a discount to the current trading price of $1.68, with InvestingPro analysis indicating the stock is trading near its Fair Value. Notably, analysts have set an ambitious price target of $9.00 for the stock, suggesting significant upside potential.
The pre-funded warrants are exercisable at $0.001 per share and can be exercised immediately, while the common warrants have an exercise price of $1.40 per share and will become exercisable six months after issuance. The common warrants will expire five and a half years from the date of issuance.
Investors holding common and pre-funded warrants are restricted from exercising these warrants if doing so would result in ownership exceeding 4.99% or 9.99% of outstanding common stock, based on the investor's preference. However, they may increase their ownership to 9.99% upon providing at least 61 days' notice to the company.
The closing of the transaction is expected to occur on or around January 15, 2025, with total gross proceeds anticipated to be $3.5 million, assuming no warrants are exercised, and prior to deducting placement agent fees and other offering expenses.
In connection with the PIPE transaction, Kairos Pharma has also entered into a registration rights agreement with the investors, requiring the company to file a registration statement with the SEC for the resale of the common shares and warrant shares issued in the offering. The company must file this registration statement within 15 days after the final closing and have it declared effective within 30 days after the filing date.
Furthermore, executives, directors, and significant shareholders of Kairos Pharma have agreed to lock-up provisions, restricting the sale of the company's securities for 90 days post-closing, subject to customary exceptions and investors' consent.
The securities offered in the PIPE transaction were not registered under the Securities Act of 1933 and were offered pursuant to an exemption from registration. The company's CEO, John S. Yu, signed off on the SEC filing, affirming the details of the transaction.
This news is based on a press release statement and reflects the company's current financial strategy to bolster its capital through this PIPE transaction. InvestingPro data reveals the company maintains a healthy current ratio of 2.84, indicating strong short-term liquidity. While the company's overall financial health score is rated as FAIR, subscribers can access 8 additional ProTips and comprehensive financial metrics to better evaluate this investment opportunity.
In other recent news, Kairos Pharma has seen significant changes in its board of directors and received positive attention from EF Hutton. The pharmaceutical company announced the resignation of Dr. Rosemary Mazanet and the appointment of Dr. Rahul Singhvi as a new board member.
Dr. Singhvi, with his vast experience in the life sciences industry, will serve on the audit committee and chair the compensation committee and the nominating and corporate governance committee.
In addition to these changes, Kairos Pharma is facing near-term profitability challenges as indicated by its EBITDA of -$1.83 million in the last twelve months. However, analysts have set an ambitious target price of $9 per share, suggesting potential for growth.
Furthermore, EF Hutton has initiated coverage on Kairos Pharma with a Buy rating and a price target set at $9.00. The firm highlighted Kairos Pharma's innovative work on immune suppression and drug resistance in the field of cancer therapeutics.
The company's most advanced drug, KROS 101, a GITR inhibitor, is currently in a significant Phase 2 trial, which EF Hutton believes could be transformative for Kairos Pharma. These are the recent developments in the company's journey.
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