| Item 1.01 |
Entry into a Material Definitive Agreement. |
On August 6, 2025, Fractyl Health, Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Ladenburg Thalmann & Co. Inc. (the “Underwriter”), in connection with the underwritten offering, issuance and sale by the Company of 19,047,619 shares of the Company’s common stock, $0.00001 par value per share (the “Common Stock”), warrants to purchase up to 19,047,619 shares of Common Stock (the “Tranche A Warrants”) and warrants to purchase 19,047,619 shares of Common Stock (the “Tranche B Warrants” and, together with the Tranche A Warrants, the “Warrants”). The combined offering price for each share of Common Stock, accompanying Tranche A Warrant and accompanying Tranche B Warrant was $1.05. The securities were issued pursuant to an effective shelf registration statement on Form S-3 (File No. 333-285522) and a related prospectus supplement filed with the Securities and Exchange Commission (the “Offering”). The Offering closed on August 7, 2025.
Each Tranche A Warrant has an exercise price per share of Common Stock equal to $1.05, subject to certain adjustments. The Tranche A Warrants are exercisable at any time on or after August 7, 2025 and will expire on August 7, 2027. However, under the Tranche A Warrant, the Company may not effect the exercise of any Tranche A Warrant, and a holder will not be entitled to exercise any portion of any Tranche A Warrant, which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by the holder of the Tranche A Warrant (together with its affiliates) to exceed 4.99% (or, upon election by a holder, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to the exercise. However, any holder may increase or decrease such percentage to any other percentage upon at least 61 days’ prior notice from the holder to the Company subject to the terms of the Tranche A Warrant. Generally, the Tranche A Warrants may only be exercised through a cash exercise, however, the holder may elect to exercise the Tranche A Warrant through a cashless exercise if at the time of exercise thereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of, the Common Stock to the holder. The Tranche A Warrants are callable at the Company’s option following the release of 3-month randomized midpoint clinical data from the ongoing REMAIN-1 study, subject to satisfaction of certain conditions including that the average trading price of the stock exceeds $1.37 per share for 15 consecutive trading days and a minimum daily trading volume threshold.
Each Tranche B Warrant has an exercise price per share of Common Stock equal to $1.05, subject to certain adjustments. The Tranche B Warrants are exercisable upon receipt of stockholder approval as may be required by the applicable rules and regulations of The Nasdaq Global Market (the “Tranche B Warrant Stockholder Approval”) and will expire on the date that is five (5) years from the date of the Tranche B Warrant Stockholder Approval. Under the Tranche B Warrant, the Company may not effect the exercise of any Tranche B Warrant, and a holder will not be entitled to exercise any portion of any Tranche B Warrant, which, upon giving effect to such exercise, would cause the aggregate number of shares of the Common Stock beneficially owned by the holder of the Tranche B Warrant (together with its affiliates) to exceed 4.99% (or, upon election by a holder, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to the exercise. However, any holder may increase or decrease such percentage to any other percentage upon at least 61 days’ prior notice from the holder to the Company subject to the terms of the Tranche B Warrant. The holder may, in its sole discretion, elect to exercise the Tranche B Warrant through a cashless exercise or for cash.
In addition, the Company granted the Underwriter a 30-day option to purchase up to an additional 2,857,142 shares of Common Stock, along with associated Tranche A and Tranche B Warrants, at the combined public offering price, less underwriting discounts and commissions. On August 6, 2025, the Underwriter exercised the option to purchase additional shares of Common Stock, along with associated Tranche A and Tranche B Warrants, in full.
The Company received approximately $20.7 million of net proceeds from the Offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company and excluding any potential future proceeds from the exercise of the Warrants. If fully exercised for cash, the Warrants could yield up to an additional $46 million in future gross proceeds. The Company intends to use the net proceeds from the Offering, together with its existing resources, to support its Revita and Rejuva pipeline programs and for working capital and other general corporate purposes.
The Underwriting Agreement contains customary representations, warranties and covenants by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriter, including for liabilities under the Securities Act of 1933, as amended (the “Securities Act”), other obligations of the parties and termination provisions.
In addition, with respect to the Tranche B Warrants, the Company has agreed to hold a special meeting of its stockholders to obtain the Tranche B Warrant Stockholder Approval as soon as practicable following the closing of the Offering, but no later than 60 days from the closing of the Offering, with the recommendation of the Company’s Board of Directors that stockholders approve such proposal, and to solicit proxies from the Company’s stockholders in connection therewith. The Company has further agreed that if it does not obtain Tranche B Warrant Stockholder Approval at the first meeting, the Company shall use commercially reasonable efforts to seek the Tranche B Warrant Stockholder Approval every thirty (30) days until the earlier of the date on which Tranche B Warrant Stockholder Approval is obtained or the Tranche B Warrants are no longer outstanding. On August 6, 2025, the Company and its directors, its officers, Mithril LP and Mithril II LP (together with Mithril LP, “Mithril”) entered into a voting agreement, pursuant to which the Company and its directors, its officers and Mithril agreed to vote in favor of the Tranche B Warrant Stockholder Proposal (the “Voting Agreement”).
