Citius Oncology prices $11.5 million warrant inducement and signs Avenue term loan

Citius Oncology, Inc. (Nasdaq: CTOR) signed two financings on May 5, 2026: a warrant inducement transaction with gross proceeds of approximately $11.5 million, and a senior secured term loan of up to $25.0 million from funds managed by Avenue. It disclosed both, with an amendment to a note owed to its parent, in a Form 8-K filed May 6, 2026. The company says it will use net proceeds mainly to fund LYMPHIR commercialization.

The warrant inducement

Here a holder exercised, for cash, warrants to buy up to 12,777,778 shares of common stock. The warrants carried an exercise price of $1.09 per share and were issued on July 16, 2025, September 10, 2025 and December 10, 2025. The reduced price is $0.90 per share.

In return, the company issued new warrants for up to 25,555,556 shares at $0.90 per share. The new warrants become exercisable when stockholders approve the share issuance and expire five years after the later of that approval and the effective date of a resale registration statement. The company must seek that approval within 90 days of closing and file a resale registration statement within 30 days. Closing was expected on May 6, 2026. It also cut the exercise price of 15,697,024 outstanding December 2025 warrants to $0.90.

H.C. Wainwright and Co., LLC was the exclusive placement agent. Citius Oncology agreed to pay it a cash fee of 7.0% of gross proceeds, reimburse up to $50,000 for legal fees and $35,000 for non-accountable expenses, and issue placement agent warrants for up to 894,444 shares at $1.125 per share.

The Avenue loan

Citius Oncology and its subsidiary Citius Oncology Sub, Inc. signed a Loan and Security Agreement with Avenue Venture Opportunities Fund II, L.P. as administrative agent and collateral agent, and with that fund and Avenue Growth Lending Fund III, L.P. as lenders. The loan makes up to $25.0 million available in three tranches. The first, $10.0 million, was to be funded on May 6, 2026. The second, up to $7.0 million, depends on net revenue and liquidity milestones and opens no earlier than October 1, 2026. The third, up to $8.0 million, depends on further revenue milestones and opens no earlier than January 1, 2027.

The loans bear interest at the greater of the prime rate plus 6.00% and 12.75%. They mature on November 1, 2029 and are secured by all assets of the company and its subsidiary, including intellectual property. The company pays interest only for 18 months, with a six-month extension if second-tranche loans are drawn, then repays principal in equal monthly installments. Prepayment costs 3.00%, 2.00% or 1.00% of principal depending on timing. A final payment of $1,062,500 is due at maturity or prepayment, and the company paid a $250,000 commitment fee.

Each lender may convert up to its share of $4.0 million of principal into common stock at 120% of the exercise price of the lender warrants. The lender warrants cover shares worth $1 million plus 10% of the second and third tranches actually funded, divided by $0.90,. Wainwright was exclusive origination, structuring and placement agent on the loan, with a cash fee of 6.0% of the principal committed.

The parent company note

On May 4, 2026 the company and its parent, Citius Pharmaceuticals, Inc., signed a Third Amendment to a promissory note dated August 16, 2024, with an original principal amount of $3,800,111. The unpaid principal is now payable 91 days after the senior debt is fully paid. The parent may, with the company's approval, convert principal into common stock at $0.90 per share.

The product and the finances

The company's annual report for the year ended September 30, 2025 describes LYMPHIR as its lead product, an engineered IL-2 diphtheria toxin fusion protein for persistent or recurrent cutaneous T-cell lymphoma, approved by the FDA in August 2024 and launched in December 2025. That report shows a net loss of $24.8 million for the year and cash used in operations of $5.5 million. It says Citius Pharmaceuticals owned about 77.9% of the company as of December 17, 2025 and continues to fund it. Chairman and Chief Executive Officer Leonard Mazur signed the 8-K.

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