JERUSALEM - Scinai Immunotherapeutics Ltd. (NASDAQ:SCNI), a biopharmaceutical company, announced today an investment commitment from RK Stone Miami LLC, an affiliate of major shareholder Daniel Stone. The deal allows for the sale of up to $2 million in American Depositary Shares (ADSs) through December 31, 2024.
Under the agreement terms, Scinai may sell ADSs to the investor on an as-needed basis, with sales ranging from $200,000 to $500,000 per transaction, not to exceed $1.5 million before December 1, 2024. The ADSs pricing will be at a 5% discount, based on the volume-weighted average price before or after the advance notice, subject to a minimum market price.
If the investment results in the investor owning more than 9.99% of Scinai's shares, the issuance will be adjusted to avoid exceeding this threshold, with a pre-funded warrant issued for the balance. The company will pay a commitment fee to the investor, with the fee amount and payment method—cash or ADSs—determined by whether advance notices are issued during the commitment period.
The agreement does not obligate Scinai to register the ADSs for resale and includes standard closing conditions, representations, warranties, and covenants.
Scinai focuses on developing biological products for inflammation and immunology and provides Contract Development and Manufacturing Organization (CDMO) services. Its pipeline includes nanosized VHH antibodies (NanoAbs) targeting diseases with significant unmet medical needs.
The company also announced a webinar for today to discuss its Q2 2024 financial results and business update.
This investment commitment is based on a press release statement and is subject to standard risks and uncertainties, including those detailed in Scinai's filings with the SEC.
In other recent news, Scinai Immunotherapeutics Ltd. has been making strides in its research and financial restructuring. The biopharmaceutical company reported promising preclinical study results for its anti IL-17A/F NanoAb treatment for mild to moderate plaque psoriasis. The company is planning further in-vivo studies and a first-in-human clinical trial anticipated in late 2025.
The company also reported a net loss of $2,159 thousand for Q1 2024, a decrease from the previous year's net loss. Its Contract Development and Manufacturing Organization (CDMO) business unit received work orders worth around $500K in the first half of 2024, maintaining its sales guidance for the year at $1.25 million.
Scinai has been navigating compliance challenges with Nasdaq's listing requirements. However, it has been granted an extension by the Nasdaq Hearings Panel to meet the exchange's listing requirements by August 14, 2024. The company received a non-binding Letter of Intent from the European Investment Bank (EIB), proposing to convert approximately $27.6 million of EIB's loan into equity. This conversion is expected to rectify the company's shareholders' deficit, creating an estimated equity surplus of around $14.5 million. The implementation of these terms is contingent upon formal approval from EIB's governing bodies and satisfaction of conditions precedent. These are the recent developments in Scinai's ongoing efforts to regain full compliance with Nasdaq's listing rules.
InvestingPro Insights
Scinai Immunotherapeutics Ltd. (NASDAQ:SCNI) recently entered into a financial agreement that could potentially bolster its cash reserves. However, an analysis through InvestingPro reveals some critical financial metrics that investors should consider. With a market capitalization of just $3.37 million, Scinai is on the smaller end of the biopharmaceutical spectrum. The company's revenue over the last twelve months as of Q2 2024 stood at $0.28 million, which is modest, and it is important to note that the company has been operating at a loss, with a gross profit margin of -57.75%, indicating that it spends more to produce its goods than it earns from sales.
Investors might also be cautious about the company's financial health, given that Scinai operates with a significant debt burden and is quickly burning through cash, as highlighted by two InvestingPro Tips. These factors, combined with a high price volatility in its stock, suggest that the investment from RK Stone Miami LLC could be crucial for the company's near-term financial stability.
Despite the recent investment commitment, Scinai's stock has experienced a considerable decline, with a 1-year price total return of -70.22%. Moreover, the company's valuation implies a poor free cash flow yield, according to another InvestingPro Tip. For those interested in a deeper dive into the company's financials, InvestingPro offers additional insights; there are 10 more InvestingPro Tips available that can help investors make a more informed decision regarding Scinai Immunotherapeutics.
As the company prepares to discuss its Q2 2024 financial results and business update, stakeholders and potential investors should keep these metrics and tips in mind. For further detailed analysis, the full list of InvestingPro Tips can be found on the InvestingPro platform.
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