On June 20, 2024 Sonnet BioTherapeutics Holdings, Inc. (NASDAQ:SONN) (the "Company" or "Sonnet"), a clinical-stage company developing targeted immunotherapeutic drugs, reported 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 $1.20 per share (Press release, Sonnet BioTherapeutics, JUN 20, 2024, View Source [SID1234644455]). The shares of common stock issuable upon exercise of the Existing Warrants are registered pursuant to an effective registration statement on Form S-1 (File No. 333-274581). The closing of the offering is expected to occur on or about June 21, 2024, subject to satisfaction of customary closing conditions.
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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 $1.55 per share (priced at-the-market under the rules of the Nasdaq Stock Market), will be exercisable upon issuance, and have a term equal to five years from the date of issuance. In connection with the transaction, Sonnet also (i) reduced the exercise price of the Existing Warrants to purchase an aggregate of 2,824,000 shares of common stock for all holders not participating in the transaction to $1.20 per share for the remaining term of the Existing Warrants, (ii) reduced the exercise price of certain outstanding warrants to purchase up to an aggregate of 227,272 shares of common stock issued by Sonnet in June 2023 (the "June Warrants") to $1.55 per share and (iii) extended the term of the June Warrants to the term of the New Warrants.
The gross proceeds to Sonnet from the exercise of the Existing Warrants are expected to be approximately $3.4 million, prior to deducting placement agent fees and offering expenses. The Company intends to use the net proceeds for research and development, including clinical trials, working capital, the repayment of all or a portion of liabilities, and general corporate purposes.
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.