Paradigm Biopharmaceuticals Limited (ASX: PAR) announced launch of A$77.9 million capital raise anticipated to fund the company’s osteoarthritis (OA) and mucopolysaccharidosis (MPS) programs through to the end of their pivotal Phase 3 studies, new drug applications, working capital, costs of offer, further preclinical studies and possibly further intellectual property acquisitions.
The capital raise comprises a $51.5 million placement to sophisticated and professional investors across Australia, Asia and the US, including some existing shareholders(“Placement”) and a $26.3 million underwritten 1 for 8 accelerated non-renounceable entitlement offer (“Entitlement Offer”) to all eligible shareholders registered with an address in Australia or New Zealand as at the Record Date on April 17, 2019, with the company reserving the right as per ASX Listing Rule 7.2 exception 3, to place any shortfall. Bell Potter Securities Limited acted as Lead Manager to the placement and as Lead Manager and Underwriter to the Entitlement Offer.
This placement will result in the issue of around 34.37 million shares as well as the entitlement offer will result in the issue of around 17.54 million shares, at an offer price of AUD 1.50 per share, which was priced at a 21.1% discount to the last close market price on April 10, 2019.
All new shares issued will rank equally with existing ordinary shares. The settlement of the placement and institutional entitlement offer will occur on April 24, 2019, along with the new shares’ allotment in the next trading day. On May 6, 2019, the Retail Entitlement Offer may get announced for closing.
In relation with the offer, the group has announced that it has successfully met the primary and secondary endpoints of its Phase 2b trial in osteoarthritis of the knee. Cost segregation as per the use of proceeds is as follows:
- A$7 million for Complete Phase 2/3 MPS (Rare Disease) Pivotal Clinical Trial
- A$30.0 million for Complete Phase 3 Osteoarthritis Pivotal Clinical Trial
- A$3.0 million for Employ US Based staff x 2
- A$37.9 million for working capital, offer costs, further preclinical studies and IP acquisitions
BML reduction signals possible remission of the disease, in conjunction with a previously demonstrated statistically significant reduction in pain and improvement in function.
As per the timeline, the following events would be announced:
- From April 15 to April 16, trading Halt extended through
- Company resumes trading and completion of Institutional Entitlement Offer announced Record date (as at 7.00pm) for eligibility under the Entitlement Offer on April 17, 2019
- The settlement of New Shares issued under the Placement, and the Institutional Entitlement Offer Retail Entitlement Offer Opens on April 24, 2019
- Allotment of New Shares issued under the Placement will be on April 26, 2019
- Retail Entitlement Offer closes on May 6, 2019
- Retail Entitlement Offer shares are allotted on May 14, 2019
On the stock information front, at market close on 15 April 2019, the stock of Paradigm Biopharmaceuticals was trading at a price of $1.90, with a market capitalisation of ~$266.57 million. Its loss per share stood at 0.055 AUD. Its 52 weeks high stood at $2.20, with the average volume of 272,765. Its absolute return for one year, six months and three months are 533.33%, 143.59%, and 102.13%, respectively.
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