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Cyclo Therapeutics, Inc. (NASDAQ:CYTH), a biopharmaceutical company with a market capitalization of $21 million, announced today that it has entered into a Ninth Amended and Restated Note Purchase Agreement with Rafael Holdings, Inc., securing a $2.5 million convertible promissory note. This financing follows a series of previous agreements and notes issued to Rafael Holdings, totaling $18 million in convertible debt since June 11, 2024. According to InvestingPro data, the company’s current ratio of 0.17 indicates significant pressure on short-term liquidity.
The latest note, bearing a 5% annual interest rate, is due on March 31, 2025, and can be converted into shares of Cyclo Therapeutics’ common stock at Rafael’s discretion, under certain conditions such as a qualified financing event or a sale transaction. Notably, if a previously agreed merger with Rafael Holdings occurs, the outstanding balance of the note will be discharged in full. Despite financial challenges, InvestingPro analysis shows the company maintains impressive gross profit margins of 91.24%, with analysts projecting profitability this year.
Cyclo Therapeutics plans to use the proceeds for working capital and general corporate purposes. The company, which specializes in biological products, is currently involved in a merger process with Rafael Holdings, as outlined in the Merger Agreement dated August 21, 2024, and subsequently amended.
This strategic financial move comes at a time when Cyclo Therapeutics holds approximately 39.5% of its common stock by Rafael Holdings. The merger’s completion is contingent upon various conditions and the approval of both companies’ stockholders.
Investors are paying close attention to Cyclo Therapeutics’ financial health and strategic decisions, as the company navigates through its merger and continues its operations in the biopharmaceutical industry. The information provided in this article is based on the company’s latest SEC filing.
In other recent news, Cyclo Therapeutics has announced positive data from its Phase 3 TransportNPC™ trial, which evaluates Trappsol® Cyclo™ for treating Niemann-Pick Disease Type C1 (NPC1). The sub-study results showed stabilization or improvement in 87% of participants at 24 weeks and 86% at 48 weeks. Additionally, Cyclo Therapeutics has amended its merger agreement with Rafael Holdings, extending the deadline to March 31, 2025, and adjusting financial obligations. This merger involves a two-step process, with Rafael Holdings currently owning about 39.5% of Cyclo Therapeutics’ common stock. In a separate development, Cyclo Therapeutics faces a potential Nasdaq delisting for not conducting its annual shareholder meeting within the required timeframe. The company must submit a compliance plan by February 24, 2025, to address this issue. Cyclo Therapeutics also entered into a Seventh Amended and Restated Note Purchase Agreement with Rafael Holdings, issuing a $3 million convertible promissory note. This financial arrangement is part of a broader strategy to secure capital for ongoing operations and development programs.
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