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Cassava Sciences Announces Over $125 Million Raised from Warrant Distribution

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Cassava Sciences, a biotechnology company focused on Alzheimer's disease, announced over $125 million in gross proceeds from the cash-exercise of warrants, resulting in the issuance of approximately 5.7 million common shares at $22.00 per share. The net proceeds of over $123 million will be used for working capital and the development of their lead drug candidate, simufilam, for Alzheimer's treatment.

Positive
  • Cassava Sciences successfully raised over $125 million from warrant distribution, showcasing investor confidence in the company's mission and drug development efforts.

  • The net proceeds of over $123 million will provide the company with substantial working capital for continued research and development, particularly for their lead drug candidate, simufilam.

Negative
  • Any outstanding warrants that were not validly exercised were redeemed for a nominal payment, potentially leading to dilution for existing shareholders who did not participate in the cash-exercise of warrants.

  • The need to redeem outstanding warrants for a nominal payment may indicate a lack of interest or financial capability among some shareholders to fully participate in the company's warrant distribution.

Cassava Sciences' recent announcement of raising over $125 million from warrant exercises indicates a substantial influx of capital, which could be seen as a positive sign for the company's liquidity and financial flexibility. This capital injection is particularly significant for a biotechnology firm that is in the process of developing a novel drug candidate, as R&D in this field is capital-intensive and often fraught with risk. The successful capital raise through warrants – instruments that allow shareholders to purchase additional stock at a predetermined price – not only brings in funds but also reflects shareholder confidence in the company's potential, as evidenced by their choice to increase equity stakes rather than selling their warrants on the open market. It is important to note, however, that such transactions can lead to dilution of existing shares. For investors, the key consideration will be how effectively the company utilizes this capital to advance simufilam, its lead drug candidate for Alzheimer's disease. Progress in drug development and successful clinical trials could significantly influence the company's stock price and future financing ability. On the flip side, failure in these areas could lead to volatility and a potential loss of investment. In terms of financial strategy, the company's decision to engage B. Dyson Capital Advisors as the exclusive financial advisor denotes a reliance on specialized expertise for capital market transactions, which is aligned with industry practices for companies of their size and growth phase.

From a research and development perspective, the strategic capital increase for Cassava Sciences is a vital step in the continuation of their Alzheimer's drug development program. Simufilam, the lead candidate, has the potential to address a significant unmet medical need in the Alzheimer's market, which could translate into a high value proposition if clinical trials prove successful. Raising capital through warrant exercises is a common practice in the biotech industry as it provides necessary funding without immediately incurring debt. The $123 million net proceeds, earmarked for working capital and ongoing development, suggest that Cassava Sciences is positioning itself to move forward with its clinical trials and drug development efforts without undue financial strain. However, it is important for investors to monitor how efficiently this capital is allocated towards the development milestones and regulatory progress of simufilam. The R&D trajectory in biotech is long and uncertain, which means the road to potential commercialization of simufilam is likely to be a complex one. The investment community will closely track Cassava's regulatory filings, clinical trial data and peer-reviewed publications for any indications of the drug's efficacy and safety, as these will be key determinants of the company's long-term viability and stock performance.

Gross Proceeds from Warrants Represents the Sale of Approximately 5.7 Million Shares Of Common Stock At $22.00 Per Share

AUSTIN, Texas, May 08, 2024 (GLOBE NEWSWIRE) -- Cassava Sciences, Inc. (Nasdaq: SAVA) (the “Company”), a biotechnology company focused on Alzheimer’s disease, today announced total gross proceeds of over $125 million from cash-exercises of warrants that were previously distributed to its shareholders (the “Warrants”). Gross proceeds from the Warrants represents the issuance of approximately 5.7 million common shares at an effective price of $22.00 per share.

B. Dyson Capital Advisors served as exclusive financial advisor on the Warrant distribution.

“We are grateful to so many shareholders who continue to show support for Cassava Sciences and its mission to develop a novel drug candidate for Alzheimer’s disease,” said Remi Barbier, President and CEO. “Given the outcome of our first Warrant distribution, it could be interesting to do it again at some point in the future.”

Warrant holders had the option to cash-exercise their Warrants or to sell their Warrants on the open market. Warrant holders who opted to exercise their Warrants paid cash to the Company under the terms and conditions of a warrant agreement previously filed with the U.S. Securities and Exchange Commission (“SEC”).

“My impression is that most shareholders appreciated receiving Warrants,” said Eric Schoen, Chief Financial Officer. “Shareholders had the choice to sell their Warrants and receive cash, or to exercise their Warrants and increase their equity stake in the Company.”

Total net proceeds to Cassava Sciences from Warrants are estimated at over $123 million after deducting advisory fees and certain other expenses. The Company intends to use the net proceeds for working capital and general corporate purposes, including continued development of simufilam, the Company’s lead drug candidate for the proposed treatment of Alzheimer’s disease.

The last and final deadline to cash-exercise Warrants was May 6th, 5pm New York City time. There is no further opportunity to exercise Warrants. Any Warrants outstanding that were not validly exercised by 5:00 p.m. New York City time on May 6, 2024, were being redeemed by the Company starting on or around May 7, 2024 (the “Redemption Date”) for a nominal payment of $0.001 per warrant (the “Redemption Price”). The Redemption Price will become due and payable with respect to each outstanding warrant on the Redemption Date. All Warrants shall terminate and expire on the Redemption Date, subject to payment of the Redemption Price.

The shares of common stock were issued by Cassava Sciences pursuant to an automatic "shelf" registration statement on Form S-3, which was filed with the SEC on May 1, 2023, and became effective immediately upon filing, and the prospectus contained therein.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Cassava Sciences, Inc.
Cassava Sciences is a clinical-stage biotechnology company based in Austin, Texas. Our mission is to detect and treat neurodegenerative diseases, such as Alzheimer’s disease. Our novel science is based on stabilizing—but not removing—a critical protein in the brain.

For more information, please visit: https://www.CassavaSciences.com

For More Information Contact:
Eric Schoen, Chief Financial Officer
(512) 501-2450 or ESchoen@CassavaSciences.com

Cautionary Note Regarding Forward-Looking Statements and Other Notices:
This news release contains forward-looking statements, including statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements may be identified by words such as “anticipate,” “believe,” “could,” “expect,” “forecast,” “intend,” “may,” “plan,” “possible,” “potential,” “will,” and other words and terms of similar meaning.

Such statements are based largely on our current expectations and projections about future events. Such statements speak only as of the date of this news release and are subject to a number of risks, uncertainties and assumptions, including, but not limited to: the intended use of proceeds from the Warrants; the potential for us to do additional warrant distributions in the future on similar or materially different terms and conditions; comments made by our employees regarding the Warrants; and the potential treatment of Alzheimer’s disease with simufilam, the Company’s lead drug candidate.

The foregoing sets forth many, but not all, of the factors that could cause actual results to differ from expectations in any forward-looking statement. In light of these risks, uncertainties and assumptions, the forward-looking statements and events discussed in this news release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. Except as required by law, we disclaim any intention or responsibility for updating or revising any forward-looking statements contained in this news release. For further information regarding these and other risks related to our business, investors should consult our filings with the SEC, which are available on the SEC's website at www.sec.gov.

We are in the business of new drug discovery and development. Our research and development activities are long, complex, costly and involve a high degree of risk. Holders of our common stock should carefully read our current Annual Report on Form 10-K for the year ended December 31, 2023, and future reports to be filed with the SEC, including the risk factors therein. Because risk is fundamental to the process of drug discovery and development, you are cautioned to not invest in our publicly traded securities unless you are prepared to sustain a total loss of the money you have invested.


FAQ

How much money did Cassava Sciences raise from warrant distribution?

Cassava Sciences raised over $125 million from warrant distribution.

What is the effective price per share for the common stock issued through warrant distribution?

The effective price per share for the common stock issued through warrant distribution was $22.00.

What will Cassava Sciences use the net proceeds for?

Cassava Sciences intends to use the net proceeds for working capital and general corporate purposes, including the development of simufilam, their lead drug candidate for Alzheimer's disease.

When was the last deadline to cash-exercise warrants?

The last deadline to cash-exercise warrants was May 6th, 5pm New York City time.

What happens to outstanding warrants that were not validly exercised?

Outstanding warrants that were not validly exercised were redeemed by the company for a nominal payment of $0.001 per warrant.

Cassava Sciences, Inc.

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