Sonnet BioTherapeutics completes $2 million convertible note and warrant sale

Sonnet BioTherapeutics Holdings, Inc. (NASDAQ:SONN), a biotech company with a market capitalization of $3.83 million and maintaining more cash than debt on its balance sheet according to InvestingPro data, announced the completion of a private placement of convertible notes totaling $2.0 million in principal to certain accredited investors, according to a statement released in a recent SEC filing.

The transaction, which closed Monday, included the issuance of warrants to purchase an aggregate of 865,052 shares of the company’s common stock. The warrants, which generated approximately $50,000 in additional proceeds, are exercisable for five years at an exercise price of $1.156 per share.

The convertible notes do not bear interest and mature on June 30, 2026. Investors may convert the notes at any time into up to 1,730,104 shares of common stock at a conversion price of $1.156 per share. If Sonnet BioTherapeutics conducts an offering of common stock or equivalents for gross proceeds of at least $5.0 million while the notes are outstanding, the remaining principal of the notes will automatically convert into the securities issued in that offering.

If such an offering does not occur within 90 days of the note issuance, investors will have the right to purchase additional warrants for up to 3,460,208 shares at $0.25 per share. The company also agreed to file a registration statement covering the notes, warrants, and any shares issuable upon conversion or exercise.

Investors agreed to restrictions limiting their beneficial ownership to no more than 4.99%, 9.99%, or 19.99% of the company’s outstanding shares, as elected by each investor.

The notes and warrants were issued in reliance on exemptions from registration under Section 4(a)(2) of the Securities Act of 1933 and Rule 506(b) of Regulation D.

This summary is based on a press release statement filed with the Securities and Exchange Commission. InvestingPro analysis indicates the company appears undervalued at current levels, with analysts projecting revenue growth of nearly 53% for the current fiscal year. For deeper insights into Sonnet’s financial health and growth prospects, including 10 additional exclusive ProTips, visit InvestingPro.

In other recent news, Sonnet BioTherapeutics Holdings, Inc. has received a notice from The Nasdaq Stock Market LLC regarding non-compliance with the minimum stockholders’ equity requirement for continued listing. As of March 31, 2025, Sonnet reported equity of $662,262, falling short of the $2.5 million required by Nasdaq Listing Rule 5550(b)(1). The company has been given until July 14, 2025, to submit a plan to regain compliance, with the possibility of a 180-day extension if the plan is accepted. Meanwhile, Sonnet announced positive safety results from its Phase 1b/2a clinical trial of SON-1010 in combination with atezolizumab for patients with advanced solid tumors or platinum-resistant ovarian cancer. The trial has moved into its expansion phase after establishing the maximum tolerated dose without dose-limiting toxicity. Notably, one patient experienced a partial response with a 44% reduction in tumor size. The trial’s lead investigator expressed optimism about the potential of the combination therapy, given the historically low response rates to current treatments. Sonnet is exploring partnership opportunities to support further development of SON-1010.

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