Fractyl Health closes $23 million public offering with warrants

Fractyl Health Inc. (NASDAQ: GUTS) completed an underwritten public offering raising approximately $23 million in gross proceeds before fees and expenses. The metabolic therapeutics company sold 21,904,761 shares of common stock with accompanying warrants at $1.05 per unit.

The offering included full exercise of the underwriter's option to purchase an additional 2,857,142 shares with warrants. Each share came with two warrants: a Tranche A warrant with a 2-year term and a Tranche B warrant with a 5-year term, both exercisable at $1.05 per share.

Participating investors included Nantahala Capital, ADAR1 Capital Management, Second Line Capital, 683 Capital, and SilverArc Capital. The Tranche A warrants become callable by the company following release of 3-month clinical data from its REMAIN-1 study, subject to certain trading conditions.

If both warrant tranches are fully exercised for cash, they could generate up to $46 million in additional gross proceeds, bringing total potential funding to $69 million. The company plans to use proceeds for clinical development of its Revita and Rejuva platforms and general corporate purposes.

Fractyl develops treatments targeting root causes of obesity and type 2 diabetes. The company expects the proceeds to extend its cash runway through upcoming data readouts from the REMAIN-1 pivotal study at 3-and 6-month intervals.

Ladenburg Thalmann & Co. Inc. served as book-running manager for the offering, which was conducted under an existing shelf registration statement filed with the Securities and Exchange Commission.

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