Scinai Immunotherapeutics Announces Closing of Exercise of Outstanding Warrants for $1.69 Million in Gross Proceeds

Rhea-AI Summary

Scinai Immunotherapeutics Ltd. (NASDAQ: SCNI) announced the closing of its exercise of outstanding warrants, resulting in approximately $1.69 million in gross proceeds. The company intends to utilize the net proceeds for general working capital, research and development, and general corporate purposes.

Financial Analyst

The closing of the warrant exercise by Scinai Immunotherapeutics and the issuance of new warrants represent a strategic fundraising activity that is significant for the company's financial health. The gross proceeds of approximately $1.69 million, while modest, provide Scinai with immediate working capital that can be allocated towards advancing their research and development efforts in the inflammation and immunology space. This capital infusion is crucial for biopharmaceutical companies, which typically face high upfront costs and long development cycles.

However, the reduced exercise price of $0.65 per ADS compared to the original range of $1.16 to $5.00 indicates a potential dilution of shareholder value. Investors should be aware that such exercises can affect share price and ownership structure. Additionally, the placement agent's fees and offering expenses will reduce the net proceeds, which is a common occurrence in such transactions but can impact the total funds available for the company's strategic initiatives.

Furthermore, the new warrants being immediately exercisable introduces a potential future dilution risk. The terms of the new warrants, mirroring the original ones, suggest a continuity in the company's financing strategy. It's important for stakeholders to monitor how these funds are deployed and whether the investment in research and development leads to value-creating milestones for the company.

Legal Expert

The offering of new warrants in a private placement and the commitment to file a registration statement for the resale of the ADSs issuable upon exercise of the new warrants are both legally significant actions. They demonstrate Scinai's compliance with the Securities Act of 1933, as amended, which governs the issuance and sale of securities to protect investors. The exemption from the registration requirements for the private placement indicates that Scinai is targeting sophisticated investors who are presumed to have the expertise to understand and take on the risks associated with such securities.

For potential investors, the absence of registration under the 1933 Act for the newly issued warrants and the ADSs issuable upon their exercise means that there are restrictions on the public trading of these securities until they are registered with the SEC or an exemption applies. This limitation can affect the liquidity of the investment and should be factored into the risk assessment of the securities.

Scinai's agreement to file a registration statement for the resale of the ADSs is a positive step towards providing liquidity to the investors of the new warrants. However, the timeline and approval of such registration are subject to SEC review and can influence investor sentiment and the company's ability to raise further capital in the short term.

Market Research Analyst

Scinai Immunotherapeutics' focus on inflammation and immunology therapeutic products is strategically positioned in a high-growth potential market. The demand for innovative treatments in these areas is driven by a global increase in autoimmune diseases and the need for more effective therapies. The company's dual role as a developer of therapeutic products and a provider of CDMO services allows it to diversify its revenue streams, which can be appealing to investors looking for companies with multiple avenues for growth.

The capital raised through the warrant exercise is likely to be invested in projects that could enhance Scinai's competitive edge in the biopharmaceutical market. However, the actual impact on the company's market position will depend on the successful development and commercialization of its products. It is also essential to consider the competitive landscape and the rate of technological advancements in the sector, which can rapidly alter market dynamics.

Investors should also note that the biotech sector is subject to significant regulatory and development risks. The success of Scinai's research and development initiatives and thus the return on the invested capital, is contingent upon progressing through clinical trials and obtaining necessary regulatory approvals. These processes can be lengthy and uncertain and any setbacks could significantly impact the company's financial prospects and stock performance.

JERUSALEM, Jan. 4, 2024 /PRNewswire/ -- Scinai Immunotherapeutics Ltd. (NASDAQ: SCNI), a biopharmaceutical company focused both on development of inflammation and immunology (I&I) biological therapeutic products and provision of boutique CDMO services, today announced the closing of its previously announced exercise of certain outstanding warrants to purchase up to an aggregate of 2,606,552 American Depositary Shares (ADSs), each representing four hundred ordinary shares, having exercise prices ranging from $1.16 to $5.00 per ADS and terms ranging from five and one-half years to three years, respectively, issued by Scinai in September 2023 and December 2022, at a reduced exercise price of $0.65 per ADS. The ADSs representing ordinary shares issuable upon exercise of the warrants were registered pursuant to effective registration statements on Form F-1 (File Nos. 333-275217 and 333-267648).

H.C. Wainwright & Co. acted as the exclusive placement agent for the offering.

In consideration for the immediate exercise of the warrants for cash, Scinai has issued new unregistered warrants to purchase up to 5,213,104 ADSs. The new warrants have an exercise price of $0.65 per ADS, are immediately exercisable upon issuance and have a term of exercise equal to three years or five and one-half years, as applicable, based on the term of the exercised warrants, from the date of issuance.

The gross proceeds to Scinai from the exercise of the warrants were approximately $1.69 million, prior to deducting placement agent fees and offering expenses. The company intends to use the net proceeds from the offering for general working capital, research and development, 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 ADSs 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. Scinai has agreed to file a registration statement with the SEC covering the resale of the shares of ADSs 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.

About Scinai Immunotherapeutics:

Scinai Immunotherapeutics Ltd. (NASDAQ: SCNI) is a biopharmaceutical company with two complementary business units, one focused on in-house development of inflammation and immunology (I&I) biological therapeutic products beginning with an innovative, de-risked, pipeline of nanosized VHH antibodies (NanoAbs) targeting diseases with large unmet medical needs, and the other a boutique CDMO providing services to help biotech companies efficiently bring their products to market by leveraging Scinai's drug development and GMP and non-GMP manufacturing capabilities for pre-clinical and clinical studies. Company website: www.scinai.com.

Company Contact
Joshua Phillipson | +972 8 930 2529 | joshua.phillipson@scinai.com

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Litigation Reform Act of 1995. Words such as "expect," "believe," "intend," "plan," "continue," "may," "will," "anticipate," and similar expressions are intended to identify forward-looking statements. All statements, other than statements of historical facts, included in this press release regarding strategy, future operations, future financial position, future revenue, projected expenses, prospects, plans and objectives of management are forward-looking statements. Examples of such statements include, but are not limited to, the use of proceeds from the transaction described in this press release. These forward–looking statements reflect management's current views with respect to certain current and future events and are subject to various risks, uncertainties and assumptions that could cause the results to differ materially from those expected by the management of Scinai Immunotherapeutics Ltd. Risks and uncertainties include, but are not limited to, the risk that the transaction will be delayed or not occur; the risk that the Company's financial health will not be positively impacted by the transaction; the risk that the Company will not remain listed on Nasdaq; the risk that the Company will not be successful in becoming an end-to-end provider of CDMO services at high international standards; the risk that Scinai may not be able to secure additional capital on attractive terms, if at all; the risk that the therapeutic and commercial potential of NanoAbs will not be met; the risk of a delay in the preclinical and clinical trials data for NanoAbs, if any; the risk that our business strategy may not be successful; the risk that the European Investment Bank (EIB) may accelerate the financial facility under its finance contract with Scinai; Scinai's ability to acquire rights to additional product opportunities; Scinai's ability to enter into collaborations on terms acceptable to Scinai or at all; timing of receipt of regulatory approval of Scinai's manufacturing facility in Jerusalem, if at all or when required; the risk that the manufacturing facility will not be able to be used for a wide variety of applications and other vaccine and treatment technologies; and the risk that drug development involves a lengthy and expensive process with uncertain outcomes. More detailed information about the risks and uncertainties affecting the Company is contained under the heading "Risk Factors" in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on April 17, 2023, and the Company's subsequent filings with the SEC. Scinai undertakes no obligation to revise or update any forward-looking statement for any reason.

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SOURCE Scinai Immunotherapeutics Ltd.

What did Scinai Immunotherapeutics Ltd. (SCNI) announce?

Scinai Immunotherapeutics Ltd. (SCNI) announced the closing of its exercise of outstanding warrants.

How much gross proceeds did Scinai Immunotherapeutics Ltd. (SCNI) generate from the exercise of the warrants?

The gross proceeds to Scinai from the exercise of the warrants were approximately $1.69 million.

What does Scinai Immunotherapeutics Ltd. (SCNI) intend to use the net proceeds for?

The company intends to use the net proceeds from the offering for general working capital, research and development, and general corporate purposes.

Who acted as the exclusive placement agent for the offering?

H.C. Wainwright & Co. acted as the exclusive placement agent for the offering.