HOUSTON, Texas – FibroBiologics, Inc. (FBLG), a pharmaceutical company based in Delaware whose stock has declined over 93% year-to-date according to InvestingPro data, has entered into a new agreement with investment groups GEM Global Yield LLC SCS and GEM Yield Bahamas Limited, collectively known as GEM. The agreement, effective as of Thursday, includes the issuance of shares and termination of both a warrant and a material definitive agreement.
Under the terms of the side letter agreement dated Wednesday, FibroBiologics issued 1,152,074 shares of its common stock to GEM at a fixed price of $2.17 per share, resulting in a total purchase price of $2.5 million. This transaction simultaneously addresses the final payment for the shares and waives the remaining $1.5 million commitment fee initially due under the prior share purchase agreement from November 2021.
In addition to waiving the commitment fee, the agreement also led to the termination of the previously issued warrant to purchase 1,299,783 shares of FibroBiologics’ common stock. The warrant was fully terminated on Wednesday.
The share purchase agreement, which was scheduled to end no later than January 31, 2025, was officially terminated a day after the side letter agreement, concluding all obligations between FibroBiologics and GEM. With a current market capitalization of approximately $70 million and an InvestingPro Financial Health Score labeled as ‘WEAK’, this strategic move comes at a crucial time for the company.
The issuance of shares to GEM was conducted in accordance with the exemption from registration provided by Section 4(a)(2) of the Securities Act, which pertains to transactions by an issuer not involving a public offering.
This strategic move comes as FibroBiologics continues to navigate the pharmaceutical industry, focusing on the development of treatments within its sector. While the company maintains a healthy current ratio of 1.23 and holds more cash than debt on its balance sheet, InvestingPro analysis indicates analysts do not anticipate profitability this year. The company’s business offices are located at 455 E. Medical (TASE:) Center Blvd, Suite 300, Houston, Texas, and its common stock is traded on the Nasdaq Global Market under the ticker symbol FBLG.
The details of this corporate action were outlined in a report filed with the U.S. Securities and Exchange Commission and are based on the company’s official statement.
In other recent news, FibroBiologics has been the focus of several analyst reports. Rodman & Renshaw initiated coverage on the company’s shares with a Buy rating and a price target of $12.00, based on the valuation of the company’s prospects, particularly its CYW628 program for diabetic foot ulcers. H.C. Wainwright also initiated coverage on FibroBiologics with a Buy rating and a similar price target, focusing on the potential of their fibroblast cellular therapies, particularly for treating diabetic foot ulcers.
FibroBiologics has been actively securing patents for innovative treatments, including one for splenomegaly, a condition often associated with various immune-related diseases. The company has also filed a patent application aimed at enhancing the safety and efficacy of cell therapies by mitigating the risk of instant blood-mediated inflammatory reaction, and another targeting the prevention of blood clotting following cell therapy.
The company’s financial health has been highlighted with the reporting of unregistered sales of equity securities, providing $3,887,000 in gross proceeds to GEM Global Yield LLC SCS. However, the company has been operating with moderate debt levels and negative earnings of $0.57 per share over the last twelve months, emphasizing the need for additional funding.
FibroBiologics’ research and development initiatives have seen significant strides, including promising findings from its artificial thymus organoid program, which could potentially advance the field of immunotherapy. However, the company’s leadership has seen changes, with Robert Hoffman stepping in as interim CFO following Mark Andersen’s departure.
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