Quarterly report pursuant to Section 13 or 15(d)

Stockholders??? Equity (Deficit)

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Stockholders’ Equity (Deficit)
3 Months Ended
Dec. 31, 2024
Equity [Abstract]  
Stockholders’ Equity (Deficit)

6. Stockholders’ Equity (Deficit)

 

October 2023 underwritten public offering

 

On October 26, 2023, the Company closed a public offering of common stock and certain warrants through Chardan and Ladenburg Thalmann & Co. Inc. as underwriters, for net proceeds of $3.9 million through the issuance and sale of 163,281 shares of its common stock and, to certain investors, pre-funded warrants to purchase 192,187 shares of common stock, and accompanying common warrants to purchase up to an aggregate of 710,931 shares of its common stock. Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with a common warrant to purchase two shares of common stock. The public offering price of each share of common stock and accompanying common warrant was $12.80 and the public offering price of each pre-funded warrant and accompanying common warrant was $12.7992. The common warrants were immediately exercisable at a price of $12.80 per share of common stock, expire five years from the date of issuance and contain an alternative cashless exercise provision. In connection with the June 2024 inducement offer, the exercise price was decreased to $9.60 per share of common stock for common warrants that remained unexercised at the time of the offer. The pre-funded warrants were immediately exercisable at any time, until exercised in full, at a price of $0.0008 per share of common stock. In addition, warrants to purchase 10,664 shares of common stock were issued to the underwriters as compensation for their services related to the offering. These common stock warrants have an exercise price of $16.00 per share and expire five years from the date of issuance.

 


 

Sonnet BioTherapeutics Holdings, Inc.

Notes to Unaudited Interim Consolidated Financial Statements

 

Committed equity facility

 

On May 2, 2024, the Company entered into the Purchase Agreement and a Registration Rights Agreement (the “Registration Rights Agreement”), each with Chardan, related to a “ChEF,” Chardan’s committed equity facility, or the Facility (see Note 1). Pursuant to the Purchase Agreement, the Company has the right from time to time at its option to sell to Chardan up to $25.0 million in aggregate gross purchase price of newly issued shares of the Company’s common stock, of which $24.9 million is available to be sold as of December 31, 2024. The Facility will allow the Company to raise primary equity on a periodic basis at its sole discretion depending on a variety of factors including, among other things, market conditions, the trading price of the common stock, and determinations by the Company regarding the use of proceeds of such common stock. The purchase price of the shares of common stock will be determined by reference to the Volume Weighted Average Price (“VWAP”) of the common stock during the applicable purchase period, less a fixed 4% discount to such VWAP, and the total shares to be purchased on any day may not exceed 20% of the trading volume of the Company’s common stock during the applicable purchase period. The Purchase Agreement will be effective for a 36-month period ending May 16, 2027. Due to certain pricing and settlement provisions, the Purchase Agreement qualifies as a standby equity purchase agreement and includes an embedded put option and an embedded forward contract. The Company accounts for the embedded features in the Purchase Agreement as derivatives measured at fair value, with changes in fair value recognized in the consolidated statement of operations. The derivatives associated with the Purchase Agreement have been deemed de minimis. The Company did not sell any shares of common stock pursuant to the Purchase Agreement during the three months ended December 31, 2024.

 

November 2024 underwritten public offering

 

On November 7, 2024, the Company closed a public offering of common stock and certain warrants through Chardan, as underwriter, for net proceeds of $4.2 million through the issuance and sale of 155,000 shares of its common stock, pre-funded warrants to purchase up to 956,111 shares of common stock, and accompanying common warrants to purchase up to an aggregate of 2,222,222 shares of its common stock. Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with a common warrant to purchase two shares of common stock. The public offering price of each share of common stock and accompanying common warrant was $4.50 and the public offering price of each pre-funded warrant and accompanying common warrant was $4.4999. The common warrants were immediately exercisable at a price of $4.50 per share of common stock, expire five years from the date of issuance and contain an alternative cashless exercise provision. The pre-funded warrants were immediately exercisable at any time, until exercised in full, at a price of $0.0001 per share of common stock. All of the pre-funded warrants have been exercised as of December 31, 2024.

 

December 2024 registered direct and PIPE offering

 

On December 10, 2024, the Company closed a registered direct offering with institutional investors for the issuance and sale of 768,000 shares of its common stock, pre-funded warrants to purchase up to 317,325 shares of common stock, and accompanying warrants to purchase up to an aggregate of 1,085,325 shares of its common stock. Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with a common warrant to purchase one share of common stock. The offering price of each share of common stock and accompanying common warrant was $2.23 and the offering price of each pre-funded warrant and accompanying common warrant was $2.2299, priced at-the-market under the rules of the Nasdaq Stock Market. The registered direct warrants were immediately exercisable at a price of $2.10 per share, expire five years from the date of issuance and contain an alternative cashless exercise provision. The pre-funded warrants were immediately exercisable at any time, until exercised in full, at a price of $0.0001 per share of common stock. All of the pre-funded warrants have been exercised as of December 31, 2024.

 

 

Sonnet BioTherapeutics Holdings, Inc.

Notes to Unaudited Interim Consolidated Financial Statements

 

The Company closed a concurrent private placement with an existing investor for the issuance and sale of 127,500 shares of its common stock, pre-funded warrants to purchase up to 545,500 shares of common stock, and accompanying warrants to purchase up to an aggregate 673,000 shares of its common stock. Each share of common stock and pre-funded warrant to purchase one share of common stock was sold in the private placement (“PIPE”) together with a common warrant to purchase one share of common stock. The PIPE offering price of each share of common stock and accompanying common warrant was $2.23 and the PIPE offering price of each pre-funded warrant and accompanying common warrant was $2.2299, priced at-the-market under the rules of the Nasdaq Stock Market. The PIPE warrants were immediately exercisable at a price of $2.10 per share, expire five years from the date of issuance and contain an alternative cashless exercise provision. The pre-funded warrants were immediately exercisable at any time, until exercised in full, at a price of $0.0001 per share of common stock.

 

The Company raised net proceeds of approximately $3.5 million from the registered direct and PIPE offering.

 

Common stock warrants

 

As of December 31, 2024, the following equity-classified warrants and related terms were outstanding:

 

    Warrants Outstanding     Exercise Price     Expiration Date  
Common stock warrants August 2021     14,031     $ 2,094.4000       August 24, 2026  
Underwriter warrants August 2021     284     $ 2,618.0000       August 19, 2026  
Chanticleer warrants     6       $144,144.0000 - $224,224.0000       April 30, 2027 - December 17, 2028  
Series C warrants     2,297     $ 7,860.1600       October 16, 2025  
Series 3 warrants     1,566     $ 717.0240       August 15, 2027  
Common stock warrants February 2023     31,563     $ 190.0800       February 10, 2028  
Underwriter warrants February 2023     1,933     $ 237.6000       February 8, 2028  
Common stock private placement warrants June 2023     28,409     $ 12.4000       June 21, 2029  
Placement agent warrants June 2023     852     $ 118.7824       December 30, 2026  
Common stock warrants October 2023     354,994     $ 9.6000       October 27, 2028  
Pre-funded warrants October 2023     99,687     $ 0.0008        
Underwriter warrants October 2023     10,664     $ 16.0000       October 24, 2028  
Placement agent warrants June 2024     14,142     $ 14.8800       June 19, 2029  
Common stock warrants June 2024     703,125     $ 12.4000       June 21, 2029  
Common stock warrants November 2024     2,222,222     $ 4.5000       November 7, 2029  
Common stock registered direct warrants December 2024     1,085,325     $ 2.1000       December 9, 2029  
Common stock PIPE warrants December 2024     673,000     $ 2.1000       December 9, 2029  
Pre-funded warrants December 2024     545,500     $ 0.0001        
Total     5,789,600                  

 

Due to beneficial ownership limitations, 187,500 shares of common stock related to warrants that were exercised in June 2024 through the inducement offer were being held in abeyance. During the three months ended December 31, 2024, 32,375 of these shares of common stock were released from abeyance, resulting in 155,125 shares of common stock held in abeyance as of December 31, 2024.

 

During the three months ended December 31, 2024, 2,419 warrants were net share settled, resulting in the issuance of 1,209 shares of common stock, and 1,273,436 pre-funded warrants were exercised on a cash basis for de minimis proceeds.

 

During the three months ended December 31, 2023, 3,590 warrants were net share settled, resulting in the issuance of 1,795 shares of common stock, and 4,302 warrants were abandoned by the warrant holder.

 

  

Sonnet BioTherapeutics Holdings, Inc.

Notes to Unaudited Interim Consolidated Financial Statements