GT Biopharma announces private placement deal

GT Biopharma, Inc. (GTBP), currently valued at $5.83 million in market capitalization, has entered into a significant financial agreement, as detailed in a recent SEC filing. According to InvestingPro data, the company maintains more cash than debt on its balance sheet, though its current ratio of 0.72 indicates some liquidity challenges. The pharmaceutical company, which operates under the industrial classification of pharmaceutical preparations and is incorporated in Delaware, has initiated a private placement of preferred stock and warrants. This move, which took place on May 12, 2025, involves the issuance and sale of up to 6,056 shares of its Series L 10% Convertible Preferred Stock, alongside warrants to purchase shares of common stock. The aggregate stated value of the preferred stock is approximately $6.05 million, with an aggregate purchase price of $5.45 million.

The agreement also includes "Greenshoe Rights," which allow purchasers to elect to buy additional preferred stock with an aggregate stated value of up to $22 million for a purchase price of approximately $19.8 million, subject to certain conditions. These rights are proportionally available to each purchaser based on their original subscription amount.

The preferred stock can be converted into common stock at an initial conversion price of $2.043 per share, subject to certain conditions and ownership limitations. Dividends are set at a rate of 10% per annum until May 11, 2026, increasing to 12% thereafter, payable quarterly in cash, shares of common stock, or a combination thereof.

In addition to the preferred stock, purchasers will receive warrants exercisable into shares of GT Biopharma’s common stock. These warrants are divided into "Common Warrants," which are immediately exercisable upon issuance and have a five-year term, and "Vesting Warrants," which become exercisable in proportion to the exercise of Greenshoe Rights and also have a five-year term from the vesting date. Both types of warrants have an initial exercise price of $2.043 per share and feature full ratchet price protection.

The securities in this offering were made available through a private placement in accordance with Rule 506(b) of Regulation D under the Securities Act of 1933. Furthermore, the company has committed to filing a registration statement with the SEC for the public resale of the common stock issuable upon conversion of the preferred stock and exercise of the warrants.

GT Biopharma also disclosed that its officers and directors have entered into a voting agreement to vote in favor of resolutions seeking shareholder approval for the issuance of more than 19.99% of the company’s common stock. They have also agreed to a lock-up period, restricting the sale or transfer of company securities they hold for 30 days post-effective date of the registration statement or the date shareholder approval is obtained, whichever is later.

This financial maneuver is intended to bolster GT Biopharma’s capital, enabling further development and advancement of the company’s objectives. InvestingPro analysis suggests the stock is currently undervalued, with analysts setting an ambitious target price of $11 per share. The company’s overall financial health score stands at 2.16, rated as "FAIR" by InvestingPro, which offers additional insights through its comprehensive analysis tools and 7 more exclusive ProTips for subscribers. The information for this article is based on a press release statement and InvestingPro data.

In other recent news, GT Biopharma, Inc. has reported several significant developments. The company announced the exercise of warrants to purchase 302,069 shares of common stock, expecting to raise approximately $0.7 million in gross proceeds. Investors have agreed to exercise their warrants at a reduced price of $2.27 per share, and GT Biopharma will issue new unregistered warrants for the purchase of up to 604,138 additional shares. Additionally, GT Biopharma issued a pre-funded warrant to Cytovance Biologics, Inc. for services rendered, allowing the purchase of up to 326,251 shares of common stock. The exercise price has been pre-funded through the services provided by Cytovance. In another development, GT Biopharma has withdrawn its Registration Statement on Form S-1 with the SEC, which had not been declared effective, and no securities were sold related to this offering. The company has not provided specific reasons for the withdrawal. These activities reflect GT Biopharma’s ongoing financial and operational strategies.

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