aibioPetros Pharmaceuticals prices $9.6 million offering of stock and warrants at $0.24
Tickers PTPI
Petros is selling about 40,000,000 shares, or pre-funded warrants in their place, at $0.24 for about $9.6 million gross. Dawson James Securities, Inc. is the placement agent, paid 8% of the gross proceeds, and the warrants cannot be exercised until stockholders approve them.
Key facts
- Company
- Petros Pharmaceuticals, Inc. (OTC: PTPI)
- News type
- Financings
- Primary source
- Petros Pharmaceuticals, Inc. 424B4 (2025-02-19)
The offering
Petros Pharmaceuticals, Inc. (Nasdaq: PTPI) priced a public offering of approximately 40,000,000 shares of common stock, or pre-funded warrants in their place, with warrants attached. The final prospectus covers 13,950,012 units at $0.24 each and 26,049,988 pre-funded units at $0.2399 each, for a total of $9,597,395 before expenses. Each unit includes one share, a Series A warrant to buy 0.25 share and a Series B warrant to buy one share. A pre-funded unit swaps the share for a pre-funded warrant, which is nearly fully paid and exercisable at $0.0001.
Both warrant series have an exercise price of $0.48. The Series A warrants run five years and the Series B warrants one year. Petros agreed to seek stockholder approval within 60 days of closing, and to hold further meetings every 90 days until approval is obtained. The prospectus says that if approval is not obtained the warrants "may have no value." The Series B warrants also carry an alternative cashless exercise feature, under which a holder receives three shares instead of paying cash for one. The prospectus covers 120,000,000 shares that could be issued this way.
Banks and counsel
Dawson James Securities, Inc. is the exclusive placement agent, acting on a best efforts basis, and it is not buying the securities. Petros pays Dawson James a cash fee of 8% of the gross proceeds, which the prospectus shows as $768,000 in total, or $0.0192 per share.
Haynes and Boone, LLP, of New York, passes on the legal matters for Petros. Pryor Cashman LLP, also of New York, passes on the legal matters in the offering for Dawson James.
Proceeds to Petros are shown before expenses at $8,829,395. The prospectus estimates net proceeds of about $8.5 million after the placement fee and offering expenses, and says the money is for working capital.
The cash position
The prospectus reports that as of September 30, 2024, Petros had cash of $3.9 million, negative working capital of $1.8 million and an accumulated deficit of $103.9 million. At December 31, 2023, cash was about $13.3 million, working capital was positive at $9.6 million and the accumulated deficit was about $98.9 million. Cash used in operations in 2023 was about $7.6 million. By February 13, 2025, the prospectus says, the company had approximately $2.7 million of cash on hand.
The prospectus says the company does not have sufficient liquidity to fund operations for the next 12 months. Marcum LLP's report dated April 1, 2024 expressed substantial doubt about the company's ability to continue as a going concern. The prospectus repeats that the company may not be able to continue as a going concern if it cannot improve its liquidity position.
Vivus and Nasdaq
The prospectus describes a settlement with Vivus, Inc. and a foreclosure notice that Metuchen accepted on December 13, 2024. As of February 13, 2025, the unpaid promissory note stood at $7,248,634.88 in principal and $405,426.28 in interest, excluding the Vivus settlement amounts, with interest accruing at a 9% default rate. A November 2024 amendment added a covenant to keep at least $1,500,000 of unrestricted cash on hand until January 15, 2025.
Nasdaq's Listing Qualifications Staff notified the company on May 15, 2024 of a bid-price deficiency, and the prospectus discusses that notice in its listing section.
What the prospectus leaves out
The prospectus gives no pro forma cash balance after the offering. It says the company has decided to discontinue sales of Stendra to wholesalers, but does not quantify the effect on revenue. The warrants have no established trading market.
What comes next
Closing was expected on or about February 19, 2025. The next events are the first warrant stockholder meeting, due within 60 days of closing, and any further Nasdaq action on the bid-price notice. The company estimates about $8.5 million of net proceeds. The prospectus pairs that with a going-concern warning and a Vivus balance that carries 9% default-rate interest.