aibioEterna Therapeutics (now Ernexa Therapeutics) issues $1,500,000 note to Charles Cherington
Tickers ERNA
Eterna Therapeutics (now Ernexa Therapeutics, Nasdaq: ERNA) received $1,500,000 on March 11, 2025, under a promissory note with 5.0% interest that matures no later than June 15, 2025.
Key facts
- Company
- Ernexa Therapeutics Inc. (NASDAQ: ERNA)
- News type
- Financings
- Primary source
- Ernexa Therapeutics Inc. Form 8-K filed March 12, 2025 (SEC EDGAR)
Eterna Therapeutics Inc., now named Ernexa Therapeutics in the company's current filings, issued a $1,500,000 promissory note to Charles Cherington on March 11, 2025. The company disclosed the note in a Form 8-K filed March 12, 2025. The company received the full $1,500,000 that day.
The note's terms
The note accrues 5.0% a year, payable at maturity. It matures on the earliest of three dates: June 15, 2025; the first business day after the company has received more than $5 million in aggregate proceeds from issuing stock, warrants or convertible debt; or the date an event of default accelerates it. Payments go first to fees, then to accrued interest, then to principal. The company may prepay the loan at any time without penalty or premium, and prepaid amounts may not be borrowed again.
After a missed payment, overdue amounts bear a default rate of 7.0% a year. The note's events of default include failure to pay the note, a breach of a representation, failure to pay other debt above $50,000 after any grace period, and certain bankruptcy events. The note itself adds a judgment against the company of more than $50,000 that is not vacated, discharged, or stayed within thirty (30) days. After a default, the holder may demand immediate repayment of all amounts due, including interest.
The 8-K names no placement agent, underwriter or financial adviser for the note, and it does not say whether a broker was paid.
Who is lending
Cherington is one of seven stockholders who, according to the company's annual report for 2024, filed March 12, 2025, collectively own about 76% of the outstanding common stock. The others are Nicholas Singer, John D. Halpern, the George Denny Estate, Freebird Partners LP, IAF, LLC and Regolith Capital Investments LP. The report says that, to the company's knowledge, those holders are not a group acting in concert, but that they can influence the election of directors.
The 8-K does not say whether Cherington is a director or officer, or whether the board or its independent directors approved the note. It is signed by Sanjeev Luther, the company's president and chief executive officer.
Cash and the going concern warning
Its annual report for 2023 says the company had an accumulated deficit of approximately $187.0 million as of December 31, 2023. The company says it has not been profitable since it began operations. The same report says it must raise additional capital to finance operations and remain a going concern, and that adequate capital "may not be available to us on a timely basis, or at all."
It also warns that if the company cannot raise capital when needed, it may need to reduce expenses, file for bankruptcy, reorganize, merge with another entity, or cease operations.
The 8-K does not say how much cash the company had on hand at the time of the note.
The business behind the money
Eterna's business is built on an mRNA technology platform that it licenses from Factor Bioscience Limited under an exclusive agreement. The platform covers mRNA delivery, mRNA gene editing and cell reprogramming, and the company describes its aims as gene-editing and cell therapy product candidates for oncology, autoimmune and rare diseases. The 2023 report says the company's funding needs will depend on whether it can sign strategic partnerships to deploy that platform, and on the terms of those deals. After receiving results in June 2022 from the INSPIRE phase 2 trial of IRX-2, its only former product candidate, the company stopped developing it. The 2024 annual report now describes synthetic allogeneic iMSC product candidates and warns that their manufacture is complex.
The 2023 report also lists the risk of a Nasdaq delisting if the company fails to meet continued listing requirements.
What comes next
The 8-K does not describe a plan to repay the note by June 15, 2025. Lincoln Park Capital Fund LLC committed to buy up to $10.0 million of stock under a standby equity purchase agreement, and the 2024 report says about $9.7 million of that commitment was left at December 31, 2024. Sales under it could dilute other holders.