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Investing.com -- Fractyl Health Inc (NASDAQ:GUTS) stock plunged 47.3% after the metabolic therapeutics company announced the pricing of a $20 million public offering of common stock and warrants.
The offering consists of 19,047,619 shares of common stock, each accompanied by one Tranche A warrant with a 2-year term and one Tranche B warrant with a 5-year term. The combined public offering price is $1.05 per share and accompanying warrants.
Both warrant tranches have a fixed exercise price of $1.05 per share, with no variable pricing mechanisms or anti-dilution features. If fully exercised for cash, these warrants could generate up to an additional $40 million in future gross proceeds for the company.
Fractyl has also granted underwriters a 30-day option to purchase up to an additional 2,857,142 shares of common stock with associated warrants at the public offering price, less underwriting discounts and commissions.
The company, which focuses on developing treatments for obesity and type 2 diabetes, plans to use the proceeds to support its Revita and Rejuva pipeline programs, as well as for working capital and general corporate purposes.
Ladenburg Thalmann & Co. Inc. is serving as the book-running manager for the offering. The significant stock decline reflects investor concerns about potential dilution from the new share issuance.
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