NRx Pharmaceuticals, Inc. (NASDAQ:NRXP), a pharmaceutical preparations company, has announced on Monday the closure of a $5.435 million funding round, which is the second tranche of a previously agreed financing deal with institutional investors. This latest development follows the initial tranche closed on August 14, 2024.
The financing involves Senior Secured Convertible Promissory Notes and warrants to purchase shares of the company's common stock. The second tranche notes are convertible into common stock at a price lower between a fixed conversion price of $1.7664 or a variable price based on the stock's volume-weighted average price (VWAP). The conversion terms also include provisions for downward adjustment in case of future equity issuances at prices below the current conversion price.
NRx Pharmaceuticals intends to use the proceeds from this round to repay existing variable priced convertible notes and for general working capital purposes. The company has disclosed that the second tranche brought in approximately $5 million in aggregate purchase price and is accompanied by warrants to purchase up to 1,846,128 shares of common stock.
Additionally, the company and the investors have decided not to proceed with the third tranche of $5.435 million in notes initially contemplated in the agreement. As part of the transaction, NRx Pharmaceuticals has committed to file a Registration Statement to facilitate the future trading of the shares issued upon conversion of the notes and exercise of the warrants.
In other recent news, NRx Pharmaceuticals has disclosed a series of notable developments. The immediate resignation of CEO Stephen Willard has been announced, with Chairman of the Board Jonathan Javitt stepping in as Interim CEO. The company is now actively seeking a new CEO with substantial experience in commercial drug launches.
Simultaneously, NRx Pharmaceuticals' subsidiary, HOPE Therapeutics, has revealed plans to acquire a West Coast Interventional Psychiatric Clinic, which is expected to contribute positively to the company's revenue. HOPE Therapeutics has also secured a $30 million term sheet for non-dilutive financing to assist in acquiring its first interventional psychiatry clinics.
In the realm of product development, NRx Pharmaceuticals has reached a stability milestone for its preservative-free ketamine formulation, NRX-100, moving it closer to the submission of a New Drug Application to the U.S. Food and Drug Administration. The company is also preparing to file New Drug Applications for NRX-100 and NRX-101, aimed at treating suicidal depression.
Financially, NRx Pharmaceuticals has cleared its toxic debt and reduced net losses and research and development expenses, thanks to securing a crucial investor and $16 million in senior secured debt financing. These recent developments underscore the strategic efforts of NRx Pharmaceuticals and HOPE Therapeutics toward innovation and financial stability.
InvestingPro Insights
NRx Pharmaceuticals' recent $5.435 million funding round comes at a critical time for the company, as reflected in several key metrics from InvestingPro. The company's market capitalization stands at a modest $12.87 million, underscoring the importance of this latest capital infusion.
InvestingPro Tips highlight that NRXP is "quickly burning through cash" and "may have trouble making interest payments on debt." These insights align with the company's decision to use the proceeds for repaying existing convertible notes and working capital, emphasizing the urgency of their financial situation.
The stock's recent performance has been challenging, with InvestingPro data showing a 73.06% price decline over the past six months. This context makes the new funding even more crucial for the company's operations and investor confidence.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for NRXP, providing a deeper understanding of the company's financial health and market position.
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