Windtree Therapeutics Issues Convertible Notes to Raise $250,000

Windtree Therapeutics Inc (NASDAQ:WINT), a biotechnology company specializing in biological products, has entered into a financing agreement with two institutional investors. According to InvestingPro data, the company's financial health score stands at a concerning 1.63, labeled as "WEAK," making this financing crucial. On Monday, the company issued Senior Secured Promissory Notes totaling $312,500 in principal at a 20% original issue discount, yielding gross proceeds of $250,000.

The notes, set to mature on January 4, 2026, carry an annual interest rate of 10% based on a 360-day year and twelve 30-day months, with interest payments due monthly. With a current ratio of 0.27 and rapidly diminishing cash reserves, as highlighted by InvestingPro's analysis, the company's ability to meet these obligations warrants close monitoring. They also include a mandatory pre-payment clause tied to 25% of the gross proceeds from a common stock purchase agreement expected around June 26, 2025, with a 120% premium attached. However, there is no penalty for pre-payment.

Investors have the option to convert the notes into common shares at a conversion price of $1.10 per share, subject to adjustments. In connection with the note issuance, Windtree is obligated to file a registration statement within 20 days for the resale of the securities issuable under the note.

The agreement also stipulates a protective measure for investors; should Windtree issue additional shares or securities at a price lower than the current conversion price, the conversion rate will adjust to the new, lower price.

In the event of default, an additional interest rate of the lesser of 2% per month or the maximum rate permitted by law will be applied. The company has agreed to customary covenants that include a variety of obligations.

This financial move, detailed in the company's latest Form 8-K filed with the SEC, aims to secure additional funding for Windtree Therapeutics, which operates under the name 03 Life Sciences following several name changes, with its most recent former name being Discovery (NASDAQ:WBD) Laboratories Inc. With a market capitalization of just $1.01 million and negative EBITDA of -$24.68 million in the last twelve months, the company faces significant financial challenges. Unlock 12 additional key insights and detailed financial metrics with an InvestingPro subscription.

The full terms of the notes are outlined in Exhibit 4.1 of the 8-K filing. The company, based in Warrington, Pennsylvania, has not disclosed specific plans for the use of the proceeds from this financing arrangement.

In other recent news, Windtree Therapeutics announced a return to compliance with Nasdaq's minimum bid price requirement, maintaining a closing bid price of over $1.00 for ten consecutive trading days. This compliance ensures the company's continued listing on the stock market, with Nasdaq confirming the stock's performance since February 21, 2025. Additionally, Windtree Therapeutics received a Notice of Allowance from the U.S. Patent and Trademark Office for an intravenous formulation of istaroxime, aimed at treating acute heart failure. This patent is a significant milestone in the company's intellectual property strategy in the U.S. market.

The company's shareholders approved a 1-for-50 reverse stock split, effective February 20, 2025, to elevate the per-share trading price and maintain compliance with Nasdaq's listing requirements. Furthermore, Windtree reported positive results from its Phase 2b SEISMiC study of istaroxime, highlighting its potential to improve cardiac function and blood pressure in patients with early cardiogenic shock. The study results were presented at a conference in Boston, showcasing the therapy's favorable safety profile.

Shareholders also approved an amendment to the company's 2020 Equity Incentive Plan, increasing the number of shares authorized for issuance under the plan. These developments reflect Windtree Therapeutics' strategic efforts to adjust its capital structure and incentivize its employees. The company's ongoing commitment to advancing its product candidates, including istaroxime, remains a focal point amid the current global challenges.

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