DEF 14C: Kairos Pharma Secures Stockholder Approval for Share Issuance to Fund Clinical Trials

Kairos Pharma obtained majority stockholder approval to issue shares exceeding 19.99% of outstanding common stock to facilitate funding for clinical trials and general corporate purposes.

Summary

• Kairos Pharma, Ltd. is circulating an information statement to its stockholders regarding actions taken by written consent of the majority stockholders, holding approximately 55.5% of the outstanding voting power.
• The majority stockholders approved the issuance of common stock exceeding 19.99% of the company's issued and outstanding common stock, as outlined in the amended and restated securities purchase agreement dated January 16, 2025.
• This approval is necessary to comply with NYSE American Company Guide Section 713, which requires stockholder approval for certain issuances of common stock or securities convertible into common stock.
• The company entered into a purchase agreement on January 14, 2025, and an amended agreement on January 16, 2025, for the sale of pre-funded units to an accredited investor, resulting in gross proceeds of $3,497,500.
• Each pre-funded unit consists of a pre-funded warrant to purchase one share of common stock at $0.001 per share and a common warrant to purchase one and a half shares of common stock at $1.40 per share.
• The company intends to use the net proceeds from the offering to fund Phase 1 and Phase 2 clinical trials of its product candidates, potential acquisitions, working capital, and general corporate purposes.
• The issuance of the transaction shares will increase the number of shares of common stock outstanding by a total of 6,250,000 shares, assuming full exercise of the pre-funded warrants and common warrants, resulting in dilution for existing stockholders.
• The actions taken by written consent of the majority stockholders will become effective 20 calendar days after the information statement is mailed to stockholders as of the record date of January 28, 2025.
• Boustead Securities, LLC and D. Boral Capital LLC acted as co-placement agents for the offering, receiving cash compensation equal to 8% of the gross proceeds and warrants to purchase 175,000 shares of common stock at $1.40 per share.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. The company is securing funding for its clinical trials, which is a positive development. However, there is also dilution for existing shareholders, which is a negative aspect.

Positives

• The offering provides the company with up to $8.75 million in gross proceeds to fund clinical trials and other corporate activities.
• The majority stockholder approval ensures compliance with NYSE American Company Guide Section 713.
• The company has secured funding for its Phase 1 and Phase 2 clinical trials of ENV105 and KROS101.
• The company has the flexibility to use the proceeds for potential acquisitions or in-licensing activities.

Negatives

• Existing stockholders will experience dilution of their ownership percentage due to the issuance of new shares.
• The market price of the common stock could decline if the PIPE investor resells the shares acquired upon exercise of the warrants.
• The company is obligated to file a resale registration statement with the SEC, which could take up to 60 days to become effective.

Risks

• The issuance of the warrants and transaction shares is subject to risks and uncertainties described in the company's SEC filings.
• The ultimate dilutive effect cannot be conclusively determined until the common warrants are exercised.
• Sales of shares by the PIPE investor could cause the market price of the common stock to decline.

Future Outlook

The company intends to use the net proceeds from the offering and any cash exercise of the Common Warrants and PA Warrants to fund its Phase 1 and Phase 2 clinical trials of its product candidates, including ENV105 and KROS101, potential acquisitions or in-licensing activities, working capital and general corporate purposes.

Management Comments

• Our Board and the Majority Stockholders have determined that the Amended and Restated Purchase Agreement, the Pre-Funded Warrants, the Common Warrants, and our ability to issue the Pre-Funded Warrant Shares and the Common Warrant Shares thereunder in excess of the Exchange Cap is in the best interests of the Company and its stockholders.

Industry Context

Many small biotech companies rely on private investments in public equity (PIPE) deals to fund their operations, especially clinical trials. This announcement reflects a common strategy in the biotech industry to raise capital.

Comparison to Industry Standards

• PIPE financings are a common method for small-cap biotech companies to raise capital.
• The terms of the warrants, including the exercise price and cashless exercise provisions, are fairly standard for these types of transactions.
• The placement agent fees of 8% are within the typical range for similar offerings.

Stakeholder Impact

• Existing stockholders will experience dilution of their ownership percentage.
• The company's ability to fund clinical trials will benefit patients and the medical community.
• The company's employees will benefit from the continued operation and growth of the company.
• The company's suppliers and creditors will benefit from the company's financial stability.

Next Steps

• The actions approved by the majority stockholders will become effective 20 days after the information statement is mailed.
• The company will file a resale registration statement with the SEC to register the transaction shares.
• The company will proceed with its Phase 1 and Phase 2 clinical trials of ENV105 and KROS101.
• The company may pursue potential acquisitions or in-licensing activities.

Key Dates

Keywords

share issuance, stockholder approval, pre-funded units, warrants, clinical trials, dilution, PIPE investor, NYSE American, Kairos Pharma, funding