PRINCETON - Sonnet BioTherapeutics Holdings, Inc. (NASDAQ: NASDAQ:SONN), a clinical-stage biotech firm, has received preliminary approval to sell New Jersey State net operating losses (NOLs) and research and development (R&D) tax credits, potentially raising up to $0.795 million. This approval comes from the New Jersey Technology Business Tax Certificate Transfer Program, overseen by the New Jersey Economic Development Authority (NJEDA).
The program permits eligible companies to sell unused NOLs and R&D tax credits to unrelated, profitable companies within New Jersey. Sonnet can sell up to $8,143,144 of its NOLs and $62,810 of its R&D tax credits. The company also anticipates a $0.7 million net cash refund from Australia's R&D Tax Incentive Program.
Sonnet's CEO, Pankaj Mohan, expressed gratitude for the NJEDA's support and noted that these funds would offer non-dilutive capital to further the development of their targeted immunotherapeutic drugs.
The NJEDA's program aims to support technology and biotechnology companies by converting their tax losses and credits into cash to fund research and development, workforce expansion, and other approved expenses. Sonnet is among several beneficiaries selected through a competitive process this year.
Additionally, the Australian R&D Tax Incentive Program enables eligible firms to reclaim a substantial portion of their R&D costs incurred in Australia. Sonnet expects to receive the Australian net cash refund by the end of 2024 and the proceeds from the sale of its New Jersey NOLs and R&D tax credits by the end of the first quarter of 2025, pending the completion of the sales.
Sonnet BioTherapeutics specializes in oncology and has developed a proprietary platform, FHAB (Fully Human Albumin Binding), for creating biologic drugs with single or bifunctional action. Their technology focuses on targeting tumor and lymphatic tissue to optimize the safety and efficacy of immune-modulating biologic drugs.
This news is based on a press release statement and contains forward-looking statements regarding the company's financial prospects and clinical development plans. Investors are cautioned that such forward-looking statements involve risks and uncertainties and are advised not to place undue reliance on these statements, which are only valid as of the date of the press release.
In other recent news, Sonnet BioTherapeutics has made some significant strides in its operations. The company has completed a one-for-eight reverse stock split to comply with Nasdaq's minimum bid price requirement, a move that was approved by both shareholders and the board of directors. Sonnet has also made significant progress in its clinical trials, reporting positive results from its Phase 1b clinical trial of SON-080, a treatment candidate for chemotherapy-induced peripheral neuropathy.
The company has also advanced SON-1210, an immunotherapeutic for metastatic pancreatic cancer, in collaboration with the Sarcoma Oncology Center. In addition to these developments, Sonnet has launched a new communication platform, CEO Corner, aimed at providing shareholders with in-depth information on the company's progress and future plans.
In terms of financial developments, Sonnet has entered an agreement for the immediate exercise of warrants allowing the purchase of up to 2,828,500 shares of common stock at a reduced price. Additionally, it plans to issue new unregistered warrants for the purchase of up to 5,657,000 shares. The anticipated gross proceeds from these actions are projected to be around $3.4 million, which will be allocated towards research and development efforts. These are the recent developments in Sonnet's ongoing endeavors.
InvestingPro Insights
Sonnet BioTherapeutics' recent approval to sell New Jersey State net operating losses and R&D tax credits comes at a crucial time for the company, as revealed by recent InvestingPro data. With a market capitalization of just $3.35 million, the potential to raise up to $0.795 million through this program represents a significant boost to the company's financial position.
InvestingPro Tips highlight that Sonnet "holds more cash than debt on its balance sheet," which aligns with the company's strategy to secure non-dilutive capital for its research and development efforts. This is particularly important given that another InvestingPro Tip indicates the company is "not profitable over the last twelve months."
The company's financial challenges are further underscored by its revenue of only $0.06 million in the last twelve months as of Q3 2024, with a staggering revenue decline of 67.76% during the same period. These figures emphasize the importance of the additional funding sources mentioned in the article for Sonnet's ongoing operations and research initiatives.
It's worth noting that Sonnet's stock has faced significant headwinds, with InvestingPro data showing a one-year price total return of -74.73% as of the most recent data. This context makes the non-dilutive funding opportunities even more critical for the company's future.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Sonnet BioTherapeutics, providing deeper insights into the company's financial health and market position.
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