Eterna Therapeutics Inc. (NASDAQ:ERNA), a pharmaceutical company, has entered into a material definitive agreement following the closure of a private placement stock sale, according to a recent 8-K filing with the SEC.
On Monday, Eterna Therapeutics finalized a registration rights agreement with investors from its private placement of common stock. The company is committed to filing a registration statement by November 5, 2024, to register the resale of shares issued during the private placement. The registration statement is expected to be effective within 45 to 60 days post-filing.
In connection with this agreement, Eterna Therapeutics has issued approximately 1.4 million shares of common stock and pre-funded warrants to purchase 115,000 shares. This transaction has brought in approximately $1.1 million, which the company plans to use for general working capital.
Additionally, Eterna conducted an exchange of outstanding warrants and convertible notes for common stock. This exchange resulted in the issuance of 38.3 million new shares. The company also converted approximately $3.9 million in senior convertible notes into 6.2 million shares of common stock and pre-funded warrants to purchase 1.8 million shares.
Following these transactions, Eterna Therapeutics has approximately 51.4 million shares of common stock outstanding, along with pre-funded warrants and a small number of Series A convertible preferred stock.
The company also addressed its compliance with Nasdaq's Minimum Stockholders’ Equity Rule, stating that after these transactions and other adjustments, it believes its stockholders' equity exceeds the required $2.5 million. Eterna Therapeutics is scheduled for a hearing with Nasdaq's Hearings Panel on November 12, 2024, to present its plan for long-term compliance with the rule.
In other recent news, Eterna Therapeutics Inc. has entered into an exclusive license and collaboration agreement with Factor Bioscience Limited. The deal, which supersedes two previous arrangements with Factor and Exacis Biotherapeutics Inc., grants Eterna exclusive rights to develop certain technologies for cancer, autoimmune disorders, and rare diseases. Eterna's financial commitments under the new agreement include monthly payments, additional payments towards patent costs, milestone payments, royalties on net sales, and sublicensing fees.
Eterna Therapeutics also faces the risk of being delisted from the Nasdaq Stock Market due to an equity shortfall. The company plans to appeal this decision, which will temporarily delay the suspension of trading.
In another development, Eterna Therapeutics has announced a significant change in the date of its annual meeting of stockholders, now scheduled for late September. This date represents a major shift from the previous year's timeline. Stockholders intending to participate in the annual meeting or nominate board of director candidates must submit their notice by late August. These are some of the recent developments at Eterna Therapeutics Inc.
InvestingPro Insights
Recent financial data from InvestingPro sheds light on Eterna Therapeutics' current position. The company's revenue for the last twelve months as of Q2 2024 stands at a modest $0.16 million, while its gross profit margin is deeply negative at -111.11%. This aligns with an InvestingPro Tip indicating that Eterna suffers from weak gross profit margins.
Another InvestingPro Tip notes that the company is quickly burning through cash, which is particularly relevant given the recent private placement and warrant exchanges aimed at raising capital. This cash burn rate underscores the importance of the $1.1 million raised for working capital.
Despite these challenges, Eterna has seen a significant return over the last week, with a 12.64% price total return. However, this should be viewed in the context of longer-term performance, as the 3-month price total return shows a decline of 43.5%.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Eterna Therapeutics, providing deeper insights into the company's financial health and market position.
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