Cogent Biosciences Announces Oversubscribed $225 Million Private Placement
Cogent Biosciences, Inc. announces a private investment in public equity financing expected to raise approximately $225 million, positioning the company well financially through 2027. The financing, led by Commodore Capital and a large investment management firm, includes both new and existing investors. The company plans to use the funds to advance bezuclastinib through ongoing clinical trials and aims to establish it as a leading KIT mutant inhibitor for systemic mastocytosis and gastrointestinal stromal tumors.
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Cogent Biosciences secures $225 million in a private investment to fund operations through 2027.
The financing includes new and existing investors, led by Commodore Capital and a large investment management firm.
The company plans to advance bezuclastinib through clinical trials for systemic mastocytosis and gastrointestinal stromal tumors.
The private placement involves the sale of 17 million shares of common stock at $7.50 per share and Series B Preferred Stock convertible into approximately 13 million shares.
Each share of Series B Preferred Stock will convert into 1,000 shares of common stock, subject to certain limitations.
Cogent anticipates gross proceeds of $225 million from the private placement before deducting expenses.
The private investment in public equity (PIPE) deal secured by Cogent Biosciences, Inc. represents a significant capital infusion, amounting to approximately $225 million in gross proceeds . This transaction is noteworthy given the premium price of $7.50 per share , which is 37% above the closing price on the previous trading day. The involvement of a mix of new and established investors, including prominent names such as Commodore Capital and Fairmount Funds, underscores investor confidence in Cogent's strategic direction and its product pipeline.
From a financial perspective, the capital raise extends the company's operational runway into 2027, which is crucial for supporting its ongoing clinical trials. The funds are earmarked for the advancement of bezuclastinib through the SUMMIT, PEAK and APEX trials, targeting systemic mastocytosis and gastrointestinal stromal tumors. The successful completion and potential approval of these trials could lead to significant revenue streams for Cogent, assuming bezuclastinib achieves market authorization and commercial success.
However, investors should note the dilutive effect of issuing 17 million shares of common stock and Series B non-voting convertible Preferred Stock. While the immediate cash boost is beneficial, the long-term impact on earnings per share (EPS) and shareholder value must be considered. The conversion terms of the Preferred Stock, subject to stockholder approval and beneficial ownership limitations, introduce additional layers of complexity and potential future dilution.
The clinical progress of bezuclastinib is of paramount importance. As a KIT mutant inhibitor , its success in the SUMMIT, PEAK and APEX trials could position it as a leading treatment for systemic mastocytosis and gastrointestinal stromal tumors. The investor webcast scheduled to discuss the SUMMIT Part 1b data at the AAAAI annual meeting will be a critical event for stakeholders to assess the drug's efficacy and safety profile.
Systemic mastocytosis and gastrointestinal stromal tumors represent areas with unmet medical needs and the development of targeted therapies like bezuclastinib could offer significant patient benefits. The extended funding runway allows Cogent to potentially reach critical clinical readouts without the immediate need for further capital raises, which could disrupt the company's focus and momentum.
It is important for stakeholders to monitor the clinical trial progress closely, as any setbacks or adverse events could impact the company's valuation and future prospects. Conversely, positive trial results could lead to FDA approval and commercialization, which would be a major milestone for Cogent and its investors.
The biotechnology sector is highly competitive, with many companies vying for investment and market share. Cogent's ability to secure a PIPE at a significant premium indicates a strong market interest in its niche of precision therapies for genetically defined diseases. This financing move may also signal to the market that Cogent is confident in its clinical data and future prospects.
The deal also reflects broader market trends where biotech companies with promising pipelines are able to attract substantial private investment, despite the inherent risks of drug development. For market observers, the participation of institutional and accredited healthcare specialist investors in this PIPE could be seen as a positive indicator of Cogent's standing within the biotech industry.
However, the market will be watching for the outcomes of the SUMMIT, PEAK and APEX trials, as these will have a direct impact on Cogent's market valuation and future growth potential. The successful commercialization of bezuclastinib could also influence market dynamics in the treatment of systemic mastocytosis and gastrointestinal stromal tumors, potentially leading to shifts in investment across the sector.
02/14/2024 - 07:00 AM
Pro-forma cash, cash equivalents and marketable securities expected to fund the Company into 2027 and through clinical readouts from ongoing SUMMIT, PEAK and APEX registration-directed trials
Cogent to host investor webcast at 8:00 a.m. ET on February 23 to review the SUMMIT Part 1b data with bezuclastinib at AAAAI annual meeting
WALTHAM, Mass. and BOULDER, Colo., Feb. 14, 2024 (GLOBE NEWSWIRE) -- Cogent Biosciences, Inc. (Nasdaq: COGT), a biotechnology company focused on developing precision therapies for genetically defined diseases, today announced it has entered into a securities purchase agreement for a private investment in public equity financing that is expected to result in gross proceeds of approximately $225 million to the Company, before deducting placement agent fees and offering expenses.
This financing was led by Commodore Capital and a large investment management firm and included participation from both new and existing investors, including Fairmount Funds, Redmile Group, Janus, TCGX, Adage Capital Partners LP, Venrock Healthcare Capital Partners, Deerfield and Perceptive Advisors.
J.P. Morgan Securities LLC, Jefferies LLC and Piper Sandler & Co. acted as placement agents.
“With this announcement, we put Cogent in an extremely strong financial position to move bezuclastinib rapidly through three ongoing registration-directed clinical trials and toward our ultimate goal of positioning it as the best-in-class KIT mutant inhibitor for patients living with systemic mastocytosis and gastrointestinal stromal tumors,” said Andrew Robbins, President and Chief Executive Officer of Cogent Biosciences. “We are excited to describe our new clinical data update from Part 1b of the SUMMIT clinical trial in patients with Nonadvanced Systemic Mastocytosis at the annual American Academy of Asthma, Allergy and Immunology (AAAAI) meeting later this month.”
Pursuant to the terms of the agreement, Cogent will sell 17 million shares of its common stock at a price of $7.50 per share, representing a premium of approximately 37% to its closing price on February 13, 2024, along with Series B non-voting convertible Preferred Stock (the “Series B Preferred Stock”) convertible into approximately 13 million shares of its common stock to a select group of institutional and accredited healthcare specialist investors in an oversubscribed private placement pursuant to the terms of the securities purchase agreement. Subject to Cogent stockholder approval, each share of Series B Preferred Stock will automatically convert into 1,000 shares of common stock, subject to certain beneficial ownership limitations set by each holder. Cogent anticipates the gross proceeds from the private placement to be approximately $225 million , before deducting any offering-related expenses. The private placement is expected to close on or about February 16, 2024, subject to customary closing conditions.
Cogent intends to use the net proceeds from the proposed financing to fund research and development, activities relating to bezuclastinib and other product candidates, as well as for working capital and general corporate purposes. The proceeds from this financing, combined with current cash, cash equivalents and marketable securities, are expected to fund Cogent into 2027 and through all clinical readouts from SUMMIT, PEAK and APEX registration-directed trials.
The securities to be sold in the private placement have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state or other applicable jurisdiction’s securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state or other jurisdictions’ securities laws. Concurrently with the execution of the securities purchase agreement, Cogent and the investors entered into a registration rights agreement pursuant to which Cogent has agreed to file a registration statement with the U.S. Securities and Exchange Commission (the “SEC”) registering the resale of the shares of common stock issued in the private placement and the shares of common stock issuable upon the conversion of the shares of Series B Preferred Stock issued in the private placement no later than the 45th day after the pricing of the private placement.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any offer, solicitation or 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. Any offering of the securities under the resale registration statement will only be made by means of a prospectus.
Webcast Information and AAAAI Poster investors.cogentbio.com . A replay of the webcast will be available approximately two hours after the completion of the event and will be archived for up to 30 days. The AAAAI poster will be made available to registered conference attendees and will also be in the Posters and Publications section of Cogent’s website at www.cogentbio.com/research .
About Cogent Biosciences, Inc.
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How much is Cogent Biosciences raising through the private investment in public equity financing?
Cogent Biosciences is expected to raise approximately $225 million through the private investment in public equity financing.
Who led the financing for Cogent Biosciences?
The financing was led by Commodore Capital and a large investment management firm.
What is the purpose of the funds raised by Cogent Biosciences?
Cogent Biosciences plans to use the funds to advance bezuclastinib through ongoing clinical trials for systemic mastocytosis and gastrointestinal stromal tumors.
How many shares of common stock is Cogent Biosciences selling in the private placement?
Cogent Biosciences is selling 17 million shares of its common stock in the private placement.
How much will each share of Series B Preferred Stock convert into?
Each share of Series B Preferred Stock will automatically convert into 1,000 shares of common stock, subject to certain limitations.
