HOUSTON - CNS Pharmaceuticals, Inc. (NASDAQ:CNSP), a biopharmaceutical company focusing on brain and central nervous system cancers, has entered into agreements with institutional investors for a direct offering and concurrent private placement expected to yield gross proceeds of approximately $1.37 million. The transaction is set to close around June 17, 2024, subject to customary closing conditions.
The offering involves the sale of 366,000 shares of common stock or equivalents at a combined price of $3.75 per share. Moreover, warrants to purchase up to an equal number of shares are being sold in a private placement with an exercise price of $3.62 per share, exercisable immediately and expiring five years from the initial exercise date.
Proceeds from the offering are earmarked for working capital and general corporate purposes. The securities in the registered direct offering will be issued under an existing shelf registration statement, which was declared effective by the U.S. Securities and Exchange Commission (SEC) on May 17, 2024. Details of the offering will be outlined in a prospectus supplement to be filed with the SEC.
The private placement component of the offering relies on an exemption from registration under the Securities Act, meaning the securities may not be offered or sold in the U.S. without registration or an exemption from registration requirements.
CNS Pharmaceuticals is developing anti-cancer drug candidates, including Berubicin, its lead drug candidate. Berubicin is a novel anthracycline and the first of its kind believed to cross the blood-brain barrier, currently in development for treating aggressive brain cancer forms like glioblastoma multiforme (GBM).
This news is based on a press release statement, and the offering's closing timing and proceeds usage are forward-looking statements subject to risks and uncertainties. CNS does not undertake any obligation to update forward-looking statements to reflect events after the date of the press release.
In other recent news, CNS Pharmaceuticals, a biopharmaceutical company, has announced a 1-for-50 reverse stock split. This move is intended to boost the company's per-share trading price and meet Nasdaq's minimum price requirement. The reverse split will consolidate every 50 shares of existing common stock into one share, proportionally affecting outstanding warrants, equity awards, and other equity rights.
The company has confirmed no fractional shares will be issued, and shareholders who would receive a fractional share will instead be rounded up to the nearest whole number. The company's authorized shares will remain at 300 million, and the par value will continue to be $0.001 per share.
In other developments, CNS Pharmaceuticals is currently developing Berubicin, a drug candidate for various serious brain and CNS cancers. These are among the recent developments affecting CNS Pharmaceuticals.
InvestingPro Insights
In light of CNS Pharmaceuticals' recent financial moves, a glance at the InvestingPro data and tips provides a clearer picture of the company's financial health and market position. With a market capitalization of just $0.87 million, CNSP is a micro-cap stock that carries a high level of risk and volatility. The company's P/E ratio (adjusted) for the last twelve months as of Q1 2024 stands at -0.05, reflecting its current earnings challenges.
InvestingPro Tips highlight several concerns for investors considering CNSP. The company is quickly burning through cash, which is concerning given that its short-term obligations exceed its liquid assets. Moreover, CNSP's stock has taken a significant hit over the last week, month, and year, with a 1-year price total return as of Day 166 of 2024 at -96.68%. This performance aligns with the company's lack of profitability over the last twelve months and analysts' expectations that CNSP will not be profitable this year.
Despite these challenges, CNSP does hold more cash than debt on its balance sheet, which is a positive sign in terms of financial stability. However, the company's valuation implies a poor free cash flow yield, and the Relative Strength Index (RSI) suggests the stock is currently in oversold territory, which could indicate potential for a rebound if investor sentiment shifts.
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