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HOUSTON-based FibroBiologics, Inc. (NASDAQ:FBLG), a pharmaceutical company with a market capitalization of $56 million and a "WEAK" financial health score according to InvestingPro, has disclosed unregistered sales of equity securities as part of an ongoing financing agreement, according to a Form 8-K filed with the Securities and Exchange Commission on February 7, 2025.
The pharmaceutical company, which specializes in preparations under the SIC code 2834, reported a series of transactions with YA II PN, LTD., an investment firm. These transactions are part of a Standby Equity Purchase Agreement (SEPA) initiated on December 20, 2024, under which YA II PN agreed to a $15 million advance to FibroBiologics, delivered in three tranches and accompanied by a $250,000 commitment fee. The financing comes as InvestingPro data shows the company is quickly burning through cash, with negative free cash flow of $10.5 million in the last twelve months.
In fulfillment of the commitment fee, FibroBiologics issued 118,991 shares of common stock to the investor on January 7, 2025, at a price of $2.1010 per share. Subsequent conversions of the second tranche of the advance resulted in the issuance of 552,113 shares at $1.6301 per share on January 23, 317,238 shares at $1.5761 per share on January 27, and 334,336 shares at $1.4955 per share on January 29, 2025.
Most recently, on today’s date, the investor converted $1,100,000 of the note, leading to the issuance of 732,941 shares at $1.5008 per share. Following these conversions, $2.0 million remains of the principal balance of the second note.
The transactions were conducted under the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, which allows for sales by an issuer not involving a public offering.
This financial activity is part of FibroBiologics’ broader strategy to secure funding for its operations. The company’s shares are traded on the Nasdaq Global Market at $1.86, down 81.6% over the past year, and it is designated as an emerging growth company. While the company maintains more cash than debt on its balance sheet, InvestingPro subscribers have access to 8 additional key financial tips and comprehensive analysis tools to evaluate emerging growth companies like FBLG. The information is based on a press release statement.
In other recent news, FibroBiologics has been making several significant strides. The company recently approved executive bonuses for fiscal 2024, with CEO Pete O’Heeron receiving a total compensation of $1,805,199, which includes a bonus of $390,000. Other executives, including the Chief Scientific Officer and Interim CFO, also received bonuses based on the company’s performance.
On the financial front, FibroBiologics secured a $25 million equity deal with investment fund Yorkville. This Standby Equity Purchase Agreement provides the company with the option to sell up to $25 million of its common stock to Yorkville over a two-year period. The initial funding will support the completion of their first-in-human trial for diabetic foot ulcers and IND-enabling studies for their psoriasis program.
Additionally, FibroBiologics has finalized an agreement with investment groups GEM Global Yield LLC SCS and GEM Yield Bahamas Limited. The agreement includes the issuance of shares and termination of a warrant and a material definitive agreement. The company issued 1,152,074 shares of its common stock to GEM at a fixed price, resulting in a total purchase price of $2.5 million.
The company also caught the attention of Rodman & Renshaw, which initiated coverage on FibroBiologics, assigning a Buy rating to the biotechnology company’s shares. The firm set a price target of $12.00, based on a detailed valuation of the company’s prospects, particularly its CYW628 program for diabetic foot ulcers.
Finally, FibroBiologics has filed a patent application for a new cell-based treatment aimed at splenomegaly, commonly known as an enlarged spleen. The patent application represents a significant development in the company’s pursuit of innovative treatments for immune-driven diseases. The technology utilizes fibroblast cells, which are integral to the structural framework of tissues, to potentially regulate immune activity within the spleen. These are the latest developments in the company’s operations.
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