TransCode Therapeutics agrees to sell 10,250,000 shares and warrants at $0.98

TransCode Therapeutics, Inc. (Nasdaq: RNAZ) agreed to sell 10,250,000 shares of common stock and warrants to buy up to 10,250,000 more shares in a registered direct offering. The combined price is $0.98 per share and accompanying warrant. The prospectus supplement was filed on March 25, 2025. The last reported sale price of the stock was $1.12 on March 21, 2025.

Each common warrant has an exercise price of $0.86, is immediately exercisable and expires five years after issuance. The company says the offering is priced at-the-market under Nasdaq rules. The prospectus calls it a best efforts offering with no minimum amount, so the company may not sell all of the securities offered. Delivery is expected on or about March 25, 2025, subject to customary closing conditions.

Placement agent and costs

TransCode retained ThinkEquity LLC as its exclusive placement agent. ThinkEquity is not buying the securities and is not required to arrange a sale of any particular number of shares. The total offering price is $10,045,000. Placement agent fees are $703,150, or $0.0686 per share, and proceeds to the company before expenses are $9,341,850, or $0.9114 per share. The prospectus estimates net proceeds of approximately $9.0 million after placement agent fees and offering expenses.

The company also agreed to pay ThinkEquity a non-accountable expense allowance equal to 1% of the gross proceeds and to reimburse other expenses. Those include fees and expenses of the agent's legal counsel of up to $125,000, a $29,500 cost for the agent's book-building and compliance software, and up to $30,000 of market making and settlement expenses. ThinkEquity will also receive placement agent warrants for 5% of the shares sold, and the prospectus registers those warrants and the shares issuable on them. Goodwin Procter LLP will pass on the validity of the securities for TransCode, and Troutman Pepper Locke LLP will pass on certain legal matters for ThinkEquity. The company and its directors and officers agreed to lock-ups of 60 days and 90 days, respectively, after the closing date.

The company says it will use the net proceeds, with its existing funds, for product development, including one or more clinical trials of TTX-MC138, its lead candidate, and related IND-enabling studies, plus working capital and other general corporate purposes. The prospectus says part of the proceeds could also go toward acquiring or in-licensing other candidates.

Dilution and the share count

The prospectus shows historical net tangible book value per share of negative $2.92 as of December 31, 2024. After the offering, the as adjusted figure is $0.26 per share, an increase of $3.18 for existing holders. New investors take an immediate dilution of $0.72 per share at the $0.98 offering price.

The share count is based on 13,091,336 shares outstanding as of March 21, 2025. That figure excludes 4,421,635 shares issuable on outstanding warrants at a weighted average exercise price of $5.28, and 57,074 shares issuable on options at a weighted average exercise price of $74.00.

The trial and the cash

The company announced on April 15, 2024 that the FDA had completed its review of its IND application for TTX-MC138. TransCode began a Phase 1a trial in the third quarter of 2024 at MD Anderson and three other sites. The trial is a dose-escalation study of up to six cohorts of approximately three patients each, in advanced solid tumors. The prospectus says the first cohort received the lowest dose, and that a safety review committee approved dosing in a second cohort in October 2024. The prospectus says that after three patients in each cohort received their initial dose, the committee found no drug-related serious adverse effects or dose limiting toxicities, and it approved dosing in a fourth cohort at a dose about fifty percent higher than the third. A Phase 1a stage is built to test dose and safety, and the prospectus reports no tumor response data.

The company says the net proceeds, together with existing cash and cash equivalents, will meet its capital requirements into the fourth quarter of 2025 under its current business plan. That is a short horizon for a company whose lead drug is still in dose escalation.

The going concern paragraph

The auditor's report that the prospectus incorporates by reference carries an explanatory paragraph about substantial doubt concerning TransCode's ability to continue as a going concern.

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