Fractyl Health prices 19.05M shares at $1.05 in underwritten public offering

Fractyl Health (GUTS) announced the pricing of its underwritten public offering of 19,047,619 shares of common stock and accompanying Tranche A and Tranche B warrants, for gross proceeds of $20M before deducting underwriting discounts, commissions, and offering expenses. Each share of common stock is being sold together with one Tranche A warrant with a 2-year term; and one Tranche B warrant with a 5-year term, exercisable following stockholder approval pursuant to Nasdaq rules; at a combined public offering price of $1.05. Both the Tranche A and Tranche B warrants are fixed-priced, do not have any variable priced resetting mechanisms, and contain no price-based anti-dilution or ratchets. The exercise price for both warrant tranches is $1.05 per share. The Tranche A warrants are callable at the Company’s option following the release of 3-month randomized midpoint clinical data from the ongoing REMAIN-1 study, subject to satisfaction of certain conditions including that the average trading price of the stock exceeds $1.37 per share for 15 consecutive trading days and a minimum daily trading volume threshold. In addition, Fractyl granted the underwriters a 30-day option to purchase up to an additional 2,857,142 shares of common stock, along with associated Tranche A and Tranche B Warrants, at the public offering price, less underwriting discounts and commissions.Fractyl expects to receive gross proceeds of approximately $20M from this offering, excluding any potential future proceeds from the exercise of the warrants. If fully exercised for cash, the Tranche A and Tranche B warrants could yield up to an additional $40 million in future gross proceeds. The Company intends to use the net proceeds from the proposed offering, together with its existing resources, to support its Revita and Rejuva pipeline programs and for working capital and other general corporate purposes. Ladenburg Thalmann is acting as book-running manager for the offering. This offering is expected to close on or about August 7, subject to the satisfaction of customary closing conditions.