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On 28 December 2018, Prana Biotechnology Limited (ASX: PBT) made an announcement that it has entered into a securities purchase agreement for a lead investment by Boston based Life Biosciences LLC to raise capital up to approximately A$44.5 Mn. Following this announcement, the share price of Prana Biotechnology Limited increased by 32.143 percent as on 28 December 2018.
Life Biosciences is a Private US biopharmaceutical company which is involved in the development of novel therapies, technologies, and drugs to combat the eight pathways of age-related decline (ARD). Initially, Life Biosciences will invest around A$10.6 million with the agreement allowing Prana to raise an additional US$2 million from other investors, totaling around A$13.4 million. The remaining amount of around A$31 million would be invested by Life Biosciences and other investors on an exercise of short-term warrants being issued as part of the transaction.
Commenting on this securities purchase agreement, Pranaâs Chairman & CEO Mr. Geoffrey Kempler said that Life Biosciencesâ investment in Prana is an important endorsement of the significance of Pranaâs work in addressing the neurodegenerative disease. He also told that this fund will help Prana to accelerate its drug development programs.
As per the securities purchase agreement, this transaction involves an issue of approximately 272mn new fully paid ordinary shares in the capital of Prana Biotechnology Limited together with two-for-one free attaching Warrants pursuant to the initial placement. The Ordinary Shares would be issued at AUD$0.0390 and the Warrants would have an exercise price of AUD$0.0450.
The earliest date for exercising the Warrants will be two months after their date of issue and the Warrants will expire on 19 December 2019.
The precise number of Ordinary Shares which will be issued under the initial placement will be calculated by dividing the Australian currency equivalent of US$7.5 Mn at the time of Completion by AUD$0.0390. For each ordinary share, two Warrants will be issued, and these Warrants will be issued for nil consideration and will not be quoted.
If the Warrants issued to Life Biosciences are exercised in full, it will result in issuing around 544 million additional Ordinary Shares which will take the Life Biosciencesâ total shareholding in Prana Biotechnology to approximately 60 percent.
As per the terms of the securities purchase agreement, Life Biosciences will be entitled to nominate up to three directors to Pranaâs Board for so long as it holds at least 20 percent of the Ordinary Shares on issue. Dr. Sinclair and Mr. Edwards will be the initial nominees from Life Biosciences. In addition to the investment by Life Biosciences, the securities purchase agreement allows Prana to raise an additional US$2 million from other investors.
Prana is going to file a registration statement within 30 days of closing the Transaction for purposes of registering the Ordinary Shares and ordinary shares underlying the Warrants to be acquired by Life Biosciences.
Meanwhile, in the last six months, the share price of Prana decreased by 34.88 percent as on 21 December 2018. PBTâs shares traded at $0.037 with a market capitalization of circa $15.04 million as on 28 December 2018 (AEST 3:14 PM).
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