Cyclo Therapeutics, Inc., a biotech firm based in Gainesville, Florida, has entered into an amended and restated note purchase agreement with Rafael Holdings, Inc., announcing the issuance of a $2 million convertible promissory note on Monday. This arrangement modifies a previous agreement between the two entities dated June 11, 2024, which also involved a $2 million convertible note.
The new note carries a 5% annual interest rate and is set to mature on November 11, 2024. Rafael Holdings, which holds approximately 31.5% of Cyclo Therapeutics' common stock, has the option to convert the note's principal into common stock before repayment under certain conditions, including a qualified financing or a sale transaction involving the company.
Should Cyclo Therapeutics encounter an event of default, such as failing to pay the principal or interest when due under the terms of the current or previous note, Rafael may accelerate the company's obligations. Cyclo Therapeutics plans to allocate the proceeds from this note towards working capital and general corporate purposes.
The specifics of this financial agreement are detailed in the exhibits attached to the company's latest Form 8-K filed with the SEC. This document outlines the terms and conditions of the note and the agreement, providing transparency regarding the transaction.
Cyclo Therapeutics, which operates under the NASDAQ symbols CYTH for its common stock and CYTHW for its warrants, is engaged in the development of biological products. The company's financial and strategic moves are closely watched by investors, given its position in the biotech industry and the potential implications of its research and development activities.
In other recent news, Cyclo Therapeutics secured a $2M convertible note financing agreement with Rafael Holdings, Inc. The note, bearing an interest rate of 5% per annum, matures on November 11, 2024, and can be converted into common stock shares at Rafael's discretion. This strategic financial move is intended to bolster funding for ongoing operations and development projects. Ascendiant Capital also initiated coverage on Cyclo Therapeutics, assigning a Buy rating, based on a net present value analysis.
In addition to these financial developments, Cyclo Therapeutics has secured a U.S. patent for their product, Trappsol® Cyclo™, targeting early onset Alzheimer's disease. The patent, granted by the United States Patent and Trademark Office, is a significant addition to the company's portfolio. These recent developments, including the financial agreement, the analyst coverage, and the patent acquisition, reflect Cyclo Therapeutics' forward-looking approach to securing funding, gaining analyst recognition, and expanding its product portfolio.
InvestingPro Insights
As Cyclo Therapeutics continues to navigate the biotechnology landscape with strategic financial moves, real-time data and insights from InvestingPro shed light on the company's current market position. Cyclo Therapeutics, with a market capitalization of $36.06 million, is making bold strides despite facing challenges. The company's impressive gross profit margin stands at 91.02% for the last twelve months as of Q1 2024, reflecting efficient cost management relative to its revenue of $1.13 million during the same period.
InvestingPro Tips point out that Cyclo Therapeutics is expected to see net income growth this year, a positive signal for investors. Additionally, while the stock has experienced a significant decline over the past week, with a 1-week price total return of -11.59%, analysts predict profitability in the coming year. These forecasts are crucial for potential investors considering the company's future prospects.
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