425: Akari Therapeutics Announces $1.615 Million Private Placement to Existing Investors

Akari Therapeutics, Plc secures $1.615 million through a private placement of unregistered American Depository Shares (ADSs) and warrants to existing investors.

Summary

• Akari Therapeutics, Plc has entered into a definitive agreement for a private placement with existing investors to raise approximately $1.615 million.
• The company will issue unregistered American Depository Shares (ADSs), each representing 2,000 ordinary shares.
• The purchase price per ADS will be the lower of $1.57 or 70% of the volume-weighted average price of the ADSs over the 15 calendar days following the announcement, subject to a floor price of $1.12.
• The private placement is expected to close around March 21, 2024, pending customary closing conditions.
• Paulson Investment Company, LLC will receive a cash fee of 10% of the aggregate purchase price and warrants to purchase 10% of the total ADSs placed, exercisable for five years at 125% of the offering price.
• Akari Therapeutics plans to file a registration statement on Form S-3 by March 31, 2024, to register the resale of the ADSs.
• Purchasers may elect to purchase Pre-Funded Warrants in lieu of purchasing ADSs.
• The Beneficial Ownership Limitation shall be 4.99% (or, at the election of the Purchaser at Closing, 9.99%) of the number of ADSs outstanding immediately after giving effect to the issuance of the Securities on the Closing Date.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the financing provides needed capital, it comes with dilution and potential risks. The participation of existing investors is a positive sign, but the overall impact is likely to be modest.

Positives

• The financing provides Akari Therapeutics with additional capital.
• Existing investors are participating in the private placement, showing confidence in the company.
• The company is taking steps to ensure the resale of ADSs can be registered.

Negatives

• The offering involves unregistered securities, which may limit liquidity for investors until the resale registration statement is effective.
• The company is paying a 10% cash fee and issuing warrants to Paulson Investment Company, LLC, which dilutes existing shareholders.
• The purchase price of the ADSs is subject to a floor price of $1.12, which may be lower than the current market price.

Risks

• The closing of the private placement is subject to customary closing conditions and may not occur as expected.
• The market price of Akari Therapeutics' ADSs could decline below the floor price of $1.12.
• The company may not be able to successfully register the resale of the ADSs.
• The company shall not issue or sell any Ordinary Shares (or ADSs representing Ordinary Shares, including, in both cases, pursuant to the exercise of Pre-Funded Warrants) pursuant to this Agreement, and the Purchasers shall not purchase or acquire any shares of Ordinary Shares (or ADSs representing Ordinary Shares including, in both cases, pursuant to the exercise of Pre-Funded Warrants) from the Company pursuant to this Agreement, to the extent that after giving effect thereto, the aggregate number of ADSs that would be issued pursuant to this Agreement and the transactions contemplated hereby would exceed 1,320,616 ADSs, representing 2,641,231,384 Ordinary Shares (such number of shares equal to 19.99% of the Ordinary Shares issued and outstanding immediately prior to the execution of this Agreement), which number of shares shall be (i) reduced, on a share-for-share basis, by the number of Ordinary Shares issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated by this Agreement under applicable rules of The Nasdaq Stock Market and (ii) appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction that occurs after the date of this Agreement (such maximum number of shares, the Exchange Cap), unless and until the Company elects to obtain shareholder approval of the issuance of Ordinary Shares as contemplated by this Agreement, and the shareholders of the Company have in fact approved the issuance of Ordinary Shares as contemplated by this Agreement in accordance with the applicable rules of The Nasdaq Stock Market in excess of the Exchange Cap.

Future Outlook

Akari Therapeutics intends to use the net proceeds from the sale of the Securities hereunder for working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company's debt (other than payment of trade payables in the ordinary course of the Company's business and prior practices), (b) for the redemption of any Ordinary Shares or Ordinary Share Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.

Industry Context

Private placements are a common method for biotech companies to raise capital, especially when seeking to avoid the time and expense of a public offering. The terms of the offering, including the discount to market price and the inclusion of warrants, are typical for this type of financing.

Comparison to Industry Standards

• Comparable companies in the biotech sector, such as BioCryst Pharmaceuticals and Catalyst Pharmaceuticals, have also utilized private placements to secure funding for research and development, clinical trials, and general corporate purposes.
• The size of the offering ($1.615 million) is relatively small compared to some larger private placements in the industry, which can range from tens to hundreds of millions of dollars.
• The 10% cash fee and warrant issuance to the placement agent are within the typical range for such transactions.

Stakeholder Impact

• Shareholders will experience dilution due to the issuance of new ADSs and warrants.
• The company will have additional capital to fund its operations.
• The private placement could impact the market price of the company's ADSs.

Next Steps

• Close the private placement, expected on or about March 21, 2024.
• File a registration statement on Form S-3 by March 31, 2024.
• List the Placed Shares, Placed ADSs, Pre-Funded Warrant Shares and Pre-Funded Warrant ADSs on the Trading Market.

Key Dates