BioRestorative Therapies Announces Exercise of Warrants and Issuance of New Warrants in a Private Placement for $8.1 Million Gross Proceeds Priced At-the-Market
BioRestorative Therapies, Inc. announced agreements with certain holders of its existing warrants to exercise their warrants at a reduced price, generating approximately $8.1 million in gross proceeds. The reduction of the exercise price and issuance of new warrants was structured as an at-market transaction under Nasdaq rules. The new warrants will be exercisable into an aggregate of up to 2,513,685 shares of common stock, at an exercise price of $2.43 per share, and have a term of exercise equal to five years. The securities offered in the private placement have not been registered under the Securities Act of 1933, as amended, or applicable under state securities laws.
Negative
The reduction of the exercise price of the existing warrants and the issuance of new warrants might dilute the value of existing shares for current shareholders.
The recent move by BioRestorative Therapies, Inc. to restructure warrant terms and secure approximately $8.1 million in gross proceeds reflects a strategic capital raising effort. The reduction in exercise price from the original terms to $2.33 per share is a notable concession that incentivizes warrant holders to commit capital now rather than later. This could imply an immediate need for liquidity by the company, possibly to fund ongoing clinical trials or operational expenses.
Furthermore, the issuance of new warrants at an exercise price of $2.43, slightly above the reduced price of the existing warrants, suggests a confidence in the company's future stock performance. The five-year term for the new warrants provides a long-term investment opportunity for holders but also indicates a timeline for expected value realization from the company's pipeline.
Investors should consider the dilutive effect of these transactions. The potential for an additional 2,513,685 shares, if the new warrants are exercised, could dilute existing shareholders' equity. However, this dilution could be offset by the capital infusion and its potential to accelerate value-creating projects within the company.
The transaction's compliance with Nasdaq's at-market rules and the use of private placement under Section 4(a)(2) of the 1933 Act indicates adherence to regulatory frameworks, minimizing legal risk for participants. The commitment to file a resale registration statement for the new warrants' underlying shares within 10 days post-closing ensures that the securities will eventually be tradable, enhancing their attractiveness to investors.
It's critical to note that the securities offered in the private placement are not initially registered, which restricts their immediate liquidity. This is a common trade-off in private placements, as investors exchange immediate liquidity for the potential of future gains. The company's obligation to register these shares for resale later provides a pathway to liquidity, aligning with investor interests and regulatory requirements.
Examining the industry context, BioRestorative Therapies is operating in the competitive and capital-intensive biotechnology sector, where companies frequently resort to creative financing mechanisms to fund research and development. The decision to reprice and issue warrants reflects a proactive approach to capital management that is often seen in the biotech industry, especially for clinical-stage companies that may not have products on the market generating revenue.
Investors typically scrutinize such transactions for signals about a company's growth prospects and risk profile. The willingness of warrant holders to exercise at the reduced price could be perceived as a vote of confidence in the company's prospects. However, the market's reception to this news will ultimately depend on the company's ability to deliver on its clinical and business milestones, which will drive long-term value creation.
02/06/2024 - 08:05 AM
MELVILEE, N.Y., Feb. 06, 2024 (GLOBE NEWSWIRE) -- BioRestorative Therapies, Inc. ("BioRestorative" or the “Company”) (NASDAQ: BRTX), a clinical stage company focused on stem cell-based therapies, today announced it has entered into agreements with certain holders of its existing warrants exercisable for 3,351,580 shares of its common stock, in the aggregate, to exercise their warrants at a reduced exercise price of $2.33 per share, in exchange for new warrants as described below. The aggregate gross proceeds from the exercise of the existing warrants and the payment of the new warrants, as described below, is expected to total approximately $8.1 million , before deducting financial advisory fees. The reduction of the exercise price of the existing warrants and the issuance of the new warrants was structured as an at-market transaction under Nasdaq rules.
Roth Capital Partners is acting as the Company’s financial advisor for this transaction.
The shares of common stock issuable upon exercise of the warrants are registered for issuance pursuant to a registration statement on Form S-1, as amended (File No. 333-258611), which was declared effective by the Securities and Exchange Commission (“SEC”) on November 4, 2021 or for resale pursuant to a registration statement on Form S-3 (File No. 333-265052), which was declared effective by the SEC on June 16, 2022.
In consideration for the immediate exercise of the warrants for cash and the payment of $0.12 5 per share underlying the new warrants, the exercising holders will receive new warrants to purchase shares of common stock in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the "1933 Act"). The new warrants will be exercisable into an aggregate of up to 2,513,685 shares of common stock, at an exercise price of $2.43 per share and have a term of exercise equal to five years. The securities offered in the private placement have not been registered under the Securities Act of 1933, as amended, or applicable under state securities laws. Accordingly, the securities 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 such applicable state securities laws. As part of the transaction, the Company has agreed to file a resale registration statement on Form S-3 with the Securities and Exchange Commission within 10 days of the closing to register the resale of the shares of common stock underlying the new warrants issued in the private placement.
This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.
About BioRestorative Therapies, Inc.
BioRestorative Therapies, Inc. (www.biorestorative.com
• Disc/Spine Program (brtxDISC™ ): Our lead cell therapy candidate, BRTX-100, is a product formulated from autologous (or a person’s own) cultured mesenchymal stem cells collected from the patient’s bone marrow. We intend that the product will be used for the non-surgical treatment of painful lumbosacral disc disorders or as a complementary therapeutic to a surgical procedure. The BRTX-100 production process utilizes proprietary technology and involves collecting a patient’s bone marrow, isolating and culturing stem cells from the bone marrow and cryopreserving the cells. In an outpatient procedure, BRTX-100 is to be injected by a physician into the patient’s damaged disc. The treatment is intended for patients whose pain has not been alleviated by non-invasive procedures and who potentially face the prospect of surgery. We have commenced a Phase 2 clinical trial using BRTX-100 to treat chronic lower back pain arising from degenerative disc disease.
• Metabolic Program (ThermoStem® ): We are developing a cell-based therapy candidate to target obesity and metabolic disorders using brown adipose (fat) derived stem cells to generate brown adipose tissue (“BAT”). BAT is intended to mimic naturally occurring brown adipose depots that regulate metabolic homeostasis in humans. Initial preclinical research indicates that increased amounts of brown fat in animals may be responsible for additional caloric burning as well as reduced glucose and lipid levels. Researchers have found that people with higher levels of brown fat may have a reduced risk for obesity and diabetes.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward-looking statements as a result of various factors and other risks, including, without limitation, those set forth in the Company's latest Form 10-K filed with the Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements. The forward-looking statements in this release are made as of the date hereof and the Company undertakes no obligation to update such statements.
CONTACT: ir@biorestorative.com
What is the purpose of the agreements announced by BioRestorative Therapies, Inc.?
The purpose of the agreements is for certain holders of its existing warrants to exercise their warrants at a reduced price, generating approximately $8.1 million in gross proceeds.
How many shares of common stock are the new warrants exercisable into?
The new warrants will be exercisable into an aggregate of up to 2,513,685 shares of common stock.
What is the exercise price of the new warrants?
The exercise price of the new warrants is $2.43 per share.
Are the securities offered in the private placement registered under the Securities Act of 1933?
No, the securities offered in the private placement have not been registered under the Securities Act of 1933.
What is the term of exercise for the new warrants?
The new warrants have a term of exercise equal to five years.
