JERUSALEM,
June 13,
2024 /PRNewswire/ -- Scinai
Immunotherapeutics Ltd. (Nasdaq: SCNI) (the "Company"), a
biotechnology company focused on developing inflammation and
immunology (I&I) biological products and on providing CDMO
services through its Scinai Bioservices business unit, today
announced that it has received a non-binding Letter of Intent
("LoI") from the European Investment Bank (the "EIB"). This LoI
outlines specific indicative terms for converting the EIB's loan
into equity in the form of prefunded warrants, which are
exercisable into American Depositary Shares ("ADSs") representing
19.5% of the fully diluted capital of the Company at the time of
closing, along with a capped variable return primarily in the form
of a royalty on the Company's revenues. It is important to note
that the number of warrants would be fixed and without
anti-dilution rights. The amount of the loan that would be
converted is approximately $27.6
million, and based on an initial, unaudited financial
analysis, the Company believes that this loan to equity conversion
would immediately eliminate the shareholders' deficit of
$4.5 million and create an estimated
shareholders equity surplus of approximately USD$14.5 million. The Company retained Deloitte
to prepare a white paper analyzing the accounting impact of the
loan to equity conversion. The accounting analysis is expected to
be reflected in the Company's Q3 2024 financial
reports. Additional details of the proposed terms are described
below. The Company believes that these terms are very favorable to
the Company and its shareholders, and that the substantial
reduction in its long-term liabilities should improve its standing
in the financial community.
As previously announced, the Company has
received a Nasdaq Staff determination letter regarding
noncompliance with the minimum shareholders' equity required for
continued listing (under Listing Rule 5550(b)(1) or
the "Rule") and that as part of the hearing previously
requested with the Nasdaq Hearings Panel (the 'Hearings Panel") it
would present its plan to regain and remain compliant
with the Rule (the "Plan") The Company believes that the
substantial reduction in long-term liabilities should not only
enable it to regain compliance with the Rule but also would allow
it to remain compliant for the next 12 months. The Company intends
to present its Plan during its upcoming meeting with the Hearings
Panel planned for June 18, 2024.
The implementation of the restructuring
terms set out in the LoI is subject to obtaining formal approval
from the appropriate governing bodies of the EIB, including any
revised terms of the Finance Contract. The implementation of these
revised terms, once approved, also remains subject to reaching an
agreement on the amendment of the Finance Contract and any other
relevant legal documentation, and the fulfilment of any conditions
precedent, all to the EIB's satisfaction. There is no
guarantee that the parties will execute any final documents
revising the Finance Contract, and if executed, that the final
revised terms will reflect the terms described herein.
The main terms of the Amended Finance Contract will
include the following points:
- Amend the outstanding principal amount to equal
EUR 250,000 (approximately
$USD270,000), which would have a maturity of December 31, 2031. No interest would accrue or be
due and payable on the new outstanding principal
amount.
- The remaining then-outstanding principal amount and any
accrued interests at the time of the restructuring will be
converted into prefunded warrants exercisable into ADS representing
in the aggregate 19.5% of total issued capital of the Company on a
fully diluted basis at the closing of the restructuring. The number
of prefunded warrants would be fixed at the time of closing, and no
anti-dilution rights would attach to the warrants.
- Reduce the amount of net proceeds of all equity raises
payable to the EIB from 10% to 5%.
- Apply a cap of EURO 70
million (approximately USD$75.6
million) to the 3% royalties (which the Company is already
committed to paying under the current financial contract) once the
annual revenue threshold reaches EUR 5
million (approximately USD$5.4
million).
- Allow the Company to reach the EURO 70 million cap through (i) proceeds from
equity raises (as described above), (ii) royalty payments (as
described above), and (iii) any buybacks of warrants, at the
Company's discretion, at an imputed valuation of $125 million. The EIB would not have the right to
put the warrants to the Company.
- The warrants that the EIB will receive will contain a
standard "blocker" provision at 4.99% of the Company's outstanding
share capital
The Company will be working diligently in
the coming month to obtain the formal and binding approval from the
EIB's senior management and to finalize all legal terms required
for the official amendment of the Financial Contract underlying the
current venture loan being converted to equity on terms specified
above.
Scinai's management and board of directors
extend their appreciation and thanks to the EIB's officers for
their relentless support and is looking forward to completing this
important financial contract restructuring, which Scinai expects
will propel Scinai's plans to develop novel therapeutics for the
treatment of unmet needs within inflammation and immunology
diseases space.
About Scinai
Immunotherapeutics
Scinai Immunotherapeutics Ltd. (Nasdaq:
SCNI) is a biopharmaceutical company with two complementary
business units, one focused on in-house development of inflammation
and immunology (I&I) biological therapeutic products beginning
with an innovative, de-risked pipeline of nanosized VHH antibodies
(NanoAbs) targeting diseases with large unmet medical needs, and
the other a boutique CDMO providing biological drug development,
analytical methods development, clinical cGMP manufacturing, and
pre-clinical and clinical trial design and execution services to
early stage biotech drug development programs. Company
website: www.scinai.com.
Company Contacts
Investor Relations | +972 8 930 2529
| ir@scinai.com
Business Development | +972 8 930 2529 |
bd@scinai.com
Forward-Looking
Statements
This press release contains
forward-looking statements within the meaning of the Private
Litigation Reform Act of 1995. Words such as "expect," "believe,"
"intend," "plan," "continue," "may," "will," "anticipate," and
similar expressions are intended to identify forward-looking
statements. All statements, other than statements of historical
facts, are forward-looking statements. Examples of such statements
include, but are not limited to, execution of a definitive
agreement providing for revised terms of the Finance Contract with
EIB, the accounting impact of execution of such revised terms and
the ability of the Company to regain and remain compliant with the
continued listing standards of Nasdaq. These forward-looking
statements reflect management's current views with respect to
certain current and future events and are subject to various risks,
uncertainties and assumptions that could cause the results to
differ materially from those expected by the management of Scinai
Immunotherapeutics Ltd. Risks and uncertainties include, but are
not limited to, the risk that the Company will execute a definitive
agreement with the EIB providing for revised terms of the Finance
Contract with EIB; the risk that execution of such a definitive
agreement will not resolve the deficiency notice of Nasdaq with
respect to the Company's shareholders' equity; the risk that the
Company will otherwise be unable to regain compliance and remain
compliant with the continued listing requirements of Nasdaq; the
risk of delay in, Scinai's inability to conduct, or the
unsuccessful results of, its research and development activities,
including the contemplated in-vivo studies and a clinical trial;
the risk that Scinai will not be successful in expanding its CDMO
business or in-license other NanoAbs; the risk that Scinai may not
be able to secure additional capital on attractive terms, if at
all; the risk that the therapeutic and commercial potential of
NanoAbs will not be met or that Scinai will not be successful in
bringing the NanoAbs towards commercialization; the risk of a delay
in the preclinical and clinical trials data for NanoAbs, if any;
the risk that our business strategy may not be successful; the risk
that the European Investment Bank (EIB) may accelerate the
financial facility under its finance contract with Scinai; Scinai's
ability to acquire rights to additional product opportunities;
Scinai's ability to enter into collaborations on terms acceptable
to Scinai or at all; timing of receipt of regulatory approval of
Scinai's manufacturing facility in Jerusalem, if at all or when required; the
risk that the manufacturing facility will not be able to be used
for a wide variety of applications and other vaccine and treatment
technologies; and the risk that drug development involves a lengthy
and expensive process with uncertain outcomes. More detailed
information about the risks and uncertainties affecting the Company
is contained under the heading "Risk Factors" in the Company's
Annual Report on Form 20-F filed with the Securities and Exchange
Commission ("SEC") on May 15, 2024,
and the Company's subsequent filings with the SEC. Scinai
undertakes no obligation to revise or update any forward-looking
statement for any reason.
Logo:
https://mma.prnewswire.com/media/2310190/Scinai_Immunotherapeutics_Logo.jpg
View original
content:https://www.prnewswire.com/news-releases/scinai-immunotherapeutics-announces-receipt-of-a-letter-of-intent-from-the-european-investment-bank-providing-specific-terms-for-conversion-of-its-loan-to-equity-302171862.html
SOURCE Scinai Immunotherapeutics Ltd.