Form 4: Nant Capital Increases Stake in Panbela Therapeutics Through Convertible Note Purchase

Nant Capital, LLC, and its owner Patrick Soon-Shiong, have increased their stake in Panbela Therapeutics through the purchase of an 8% Senior Convertible Note, potentially converting into a significant portion of the company's common stock.

Summary

• Nant Capital, LLC acquired an 8% Senior Convertible Note from Panbela Therapeutics, Inc.
• The note is comprised of two tranches: Tranche A issued on October 22, 2024, and Tranche B issued on November 15, 2024.
• The total value of the note is $9,150,000, which includes a previously reported $2,850,000 Tranche A Note.
• The note accrues interest at 8% plus the Monthly SOFR Rate and is due on April 22, 2025.
• Nant Capital has the option to convert the note into common stock at a price of $0.37 per share.
• Conversion is limited to ensure Nant Capital and its affiliates do not exceed 33.33% ownership of Panbela's outstanding common stock before the maturity date.
• If the note is not repaid or converted by the maturity date, Nant Capital has the right to convert the full amount, including accrued interest, at their discretion.
• The potential conversion could result in Nant Capital owning 24,729,730 shares of Panbela's common stock.

Sentiment

Score: 7

Explanation: The document indicates a significant investment in Panbela, which is generally positive. However, the convertible note structure introduces potential dilution risk for existing shareholders, which tempers the overall sentiment.

Positives

• Nant Capital's investment provides Panbela Therapeutics with $9,150,000 in funding.
• The convertible note structure allows Nant Capital to potentially increase its equity stake in Panbela.
• The conversion price of $0.37 per share could be beneficial for Nant Capital if the stock price increases.
• The investment signals confidence in Panbela's future prospects from a significant investor.

Negatives

• The convertible note could dilute existing shareholders if converted to equity.
• The 33.33% ownership cap may limit Nant Capital's potential upside from the conversion before the maturity date.
• The 8% interest rate plus SOFR represents a cost of capital for Panbela.

Risks

• The conversion of the note could significantly dilute existing shareholders.
• Panbela's stock price may not reach a level that makes conversion attractive for Nant Capital.
• The company may face challenges in repaying the note if it is not converted by the maturity date.
• The interest rate on the note adds to Panbela's financial obligations.

Future Outlook

Nant Capital has the option to convert the note into common stock, potentially increasing its ownership stake in Panbela. The future depends on the company's performance and stock price.

Management Comments

• Dr. Patrick Soon-Shiong may be deemed to have beneficial ownership of the shares held by Nant Capital.

Industry Context

Convertible notes are a common financing tool in the biotech industry, allowing companies to raise capital while providing investors with potential equity upside. This investment indicates continued investor interest in Panbela's pipeline.

Comparison to Industry Standards

• Convertible notes are a common financing method for biotech companies, especially those in the clinical stage like Panbela.
• The 8% interest rate plus SOFR is within the typical range for such financings, though the specific rate depends on the company's risk profile and market conditions.
• The conversion price of $0.37 per share is a key factor, and its attractiveness will depend on Panbela's future stock performance compared to its peers.
• Similar companies like XOMA Corporation and Agenus Inc. have used convertible notes to raise capital, with varying terms and conversion prices based on their specific circumstances.

Stakeholder Impact

• Shareholders may experience dilution if the note is converted to equity.
• Panbela has secured additional funding, which could benefit the company's operations and development.
• Creditors may be impacted by the terms of the convertible note.

Next Steps

• Nant Capital will monitor Panbela's performance and stock price.
• Panbela will need to manage its debt obligations and potentially prepare for the conversion of the note.
• The company will need to consider the potential dilution of existing shareholders if the note is converted.

Key Dates

Keywords

Convertible Note, Nant Capital, Panbela Therapeutics, Equity Investment, Patrick Soon-Shiong, Debt Financing, Share Dilution