NLS Pharmaceutics CEO Issues Letter to Shareholders

NLS Pharmaceutics (NLSP) announced significant progress, including closing $2.5 million in equity financing and securing a $25 million equity facility to support its merger with Kadimastem (KDST). The merger, expected to close in early Q3 2025, will create NewcelX, a Nasdaq-listed biotech company with a pipeline focused on neurodegenerative diseases, diabetes, and CNS disorders; Mazindol ER will continue through contingent value rights. Clinical and preclinical developments include positive data for AEX"2 and successful FDA pre-IND meeting for Kadimastem's Type 1 Diabetes Treatment.

Analysis

NLS Pharmaceutics (NLSP) has reported significant operational and strategic advancements, primarily centered around its upcoming merger with Kadimastem Ltd. (KDST) and progress in its clinical pipeline. Financially, NLS secured $2.5 million in gross proceeds from two equity financing transactions in Q1 2025, priced at $3.10 and $1.65 per share, representing premiums of 48% and 10% respectively to the market prices on transaction dates. Additionally, the company signed a $25 million equity facility commitment, with potential proceeds earmarked to support the Kadimastem merger and advance clinical programs. The merger, which has received overwhelming approval from Kadimastem shareholders and is progressing with Form F-4 registration statement amendments filed ahead of the final NLS shareholder vote, is targeted for completion in early Q3 2025. This will lead to the formation of NewcelX, a Nasdaq-listed clinical-stage biotech. NewcelX's diversified pipeline will include Kadimastem's AstroRx® for Amyotrophic Lateral Sclerosis (ALS), slated to enter a Phase IIa multi-site clinical trial; IsletRx for Type 1 Diabetes, preparing for a Phase I study; and NLS's dual orexin receptor agonist (DOXA) platform, with AEX“2 and AEX“41 continuing preclinical progression for indications like narcolepsy and neurodegeneration. Recent positive developments include encouraging preclinical data for AEX“2, a successful Pre-IND meeting with the FDA for Kadimastem and iTolerance’s Type 1 Diabetes treatment, and positive study results for Mazindol ER showing significant reduction of fentanyl-induced reward behaviors in animal models. Existing NLS shareholders are expected to retain potential future value from Mazindol ER through contingent value rights. This strategic combination and financial strengthening are positioned by NLS as a transformational pivot, aimed at accelerating development and enhancing long-term shareholder value, supported by a strongly positive sentiment and high assessed market impact.

Key Decisions for Investors

• Investors should assess the potential value creation from the NLS-Kadimastem merger, which is expected to form NewcelX, a company with a diversified clinical pipeline targeting ALS, Type 1 Diabetes, and CNS disorders, supported by recent positive preclinical and regulatory milestones.
• Key catalysts to monitor include the successful completion of the merger anticipated in early Q3 2025, the subsequent NLS shareholder vote, and the timely initiation of the Phase IIa trial for AstroRx® and the Phase I study for IsletRx.
• The secured $2.5 million in funding and the $25 million equity facility commitment significantly bolster the combined entity's capital structure for near-term clinical advancements; however, ultimate returns remain contingent upon successful clinical trial outcomes and subsequent regulatory approvals inherent in the biotech sector.