Nutrition 21 sells stock, warrants to raise $17.8 million

PURCHASE, N.Y. Nutrition 21 has raised $17.8 million to be used in the advertising of its consumer healthcare products, the company announced Tuesday.

Nutrition 21 has entered into definitive agreements to privately place 17,750 shares of preferred stock and 6.7 million warrants (certificates entitling the holder to buy a specific amount of securities at a specific price for an extended period) for aggregate gross proceeds of $17.8 million.

The company intends to use the net proceeds from the sale of these securities primarily for marketing at retail and advertising Chromax, Iceland Health Omega 3 and Iceland Health Joint Relief, and for retail launches in the fall of its new Core4Life Advanced Memory Formula and Diabetes Essentials products.

The securities are being sold to a select group of institutional investors including Midsummer Investment and Fort Mason Capital. Collins Stewart served as lead placement agent and Life Science Group served as the co-lead on the offering. “We are pleased to receive the support of a number of high-caliber new and existing institutional investors,” stated Paul Intlekofer, president and chief executive officer of Nutrition 21. “Several of the investors in this financing have followed our strategy closely for some time and are in position to fully appreciate the strength and potential of our products and sales and marketing capabilities. Our products target markets significant in size and critical to quality of life and health. Heart disease continues to be the number one cause of death in the U.S. … [and] arthritis or joint pain is the second most frequently recorded chronic condition in the U.S.”

Each share of preferred stock has a stated value of $1,000 per share and subject to certain conditions is convertible into common stock at the option of the holder at $1.2158 per share. The warrants are exercisable for five years beginning six months after the closing at $1.2158 per share.