BriaCell Therapeutics Announces Pricing of $5.0 Million Registered Direct Offering

Rhea-AI Summary

BriaCell Therapeutics announced a $5.0 million registered direct offering, involving the sale of 2,402,935 common shares or pre-funded warrants and warrants to institutional investors and a director. The shares are priced at $2.00 each for institutional investors and $2.215 for the director, with warrants exercisable at $2.11 within six months and expiring in five years. The proceeds will support working capital, R&D, including a Phase 3 study in advanced breast cancer, and potential share repurchases. The offering closes around May 17, 2024, subject to customary conditions.

Positive

• Raised $5.0 million in gross proceeds before fees and expenses.
• Proceeds to support Phase 3 pivotal study in advanced breast cancer.
• Funds aimed at research and development and patent costs.
• Potential for share repurchases may enhance shareholder value.
• Institutional investors' participation indicates market confidence.

Negative

• Dilution: Issuance of 2,402,935 common shares or warrants.
• Warrants exercisable at $2.11 could lead to further dilution.
• Net proceeds reduced by placement agent fees and offering expenses.
• Participation by a director raises potential conflict of interest concerns.
• No Canadian prospectus filed, limiting investor protections.

Insights

Financial Analyst

BriaCell Therapeutics' registered direct offering, raising approximately $5.0 million, is a strategic move aimed at bolstering its financial stability and funding critical R&D activities. The pricing of shares at $2.00 and $2.215, along with warrants exercisable at $2.11, indicates a structured fundraising approach. However, the share dilution could be a concern for existing shareholders. With the funds earmarked for R&D, especially the Phase 3 pivotal study in advanced breast cancer, this can potentially lead to significant advancements if the trials show positive outcomes. The financial health of the company could be positively impacted in the long term, provided the new clinical endeavors yield promising results.

In the short term, the stock might experience some volatility due to the dilution effect and investor reaction to the capital raise. However, if the market sees this as a necessary step towards achieving long-term growth, the impact may be short-lived.

A critical factor to watch is the company's burn rate and how effectively they utilize these funds. Effective use can lead to substantial value creation, while inefficiencies can erode shareholder trust and value.

Medical Research Analyst

The allocation of the raised funds towards the Phase 3 pivotal study in advanced breast cancer is significant. Phase 3 trials are usually large-scale and critical in determining the efficacy and safety of a treatment before seeking FDA approval. Success in these trials could lead to a breakthrough in cancer treatment, an area with high unmet need and potential market demand. It's important for investors to monitor the progress and results of these trials closely, as positive outcomes could dramatically enhance BriaCell's market position and valuation.

The focus on advanced breast cancer is noteworthy, given the high incidence and the substantial investment typically required for cancer drug development. Investors should be aware that while this represents a high-risk, high-reward scenario, the potential market impact of a successful drug could be substantial.

Legal Expert

The disclosure of a related party transaction, with a director participating in the Offering, is handled according to the Multilateral Instrument 61-101 regulations. The company's reliance on exemptions and the accelerated timeline for completing the Offering without the 21-day material change report suggests a focus on expediency. This can be a double-edged sword; while it allows the company to secure funds quickly, it may raise concerns about transparency and fairness among minority shareholders.

Investors should consider the potential governance implications of such transactions, as frequent reliance on exemptions might signal larger governance issues. However, if this is an isolated instance and the funds are used effectively, the long-term benefits could outweigh the short-term governance concerns.

PHILADELPHIA and VANCOUVER, British Columbia, May 15, 2024 (GLOBE NEWSWIRE) -- BriaCell Therapeutics Corp. (Nasdaq: BCTX, BCTXW) (TSX: BCT) (“BriaCell” or the “Company”), a clinical-stage biotechnology company that develops novel immunotherapies to transform cancer care, today announced it has entered into securities purchase agreements with healthcare-focused institutional investors and a certain existing investor and a director of the Company for the purchase and sale of 2,402,935 common shares of the Company (or pre-funded warrants in lieu thereof) and warrants to purchase up to an aggregate of 2,402,935 common shares of the Company at a combined purchase price per share (and accompanying warrant) of $2.00 for the institutional investors and $2.215 for the existing investor and director of the Company for aggregate gross proceeds of approximately $5.0 million before deducting placement agent fees and other offering expenses (the “Offering”). The warrants will have an exercise price of $2.11 per share, will become exercisable six months from the date of issuance and will expire five years from the initial exercise date. The closing of the Offering is expected to take place on or about May 17, 2024, subject to the satisfaction of customary closing conditions.

The gross proceeds of the Offering will be approximately $5.0 million before deducting placement agent fees and other estimated Offering expenses payable by the Company. The Company intends to use the net proceeds from this Offering for working capital and general corporate purposes including, but not limited to, research and development studies, including the Phase 3 pivotal study in advanced breast cancer, and the patent and legal costs associated therewith, potential repurchase of certain of our issued shares and warrants and for general working capital purposes.

A.G.P./Alliance Global Partners is acting as sole placement agent for the Offering.

This Offering is being made pursuant to an effective shelf registration statement on Form S-3 (File No. 333-276650) previously filed with the U.S. Securities and Exchange Commission (the “SEC”) on January 22, 2024 and declared effective on January 31, 2024. A prospectus supplement and accompanying base prospectus describing the terms of the proposed offering will be filed with the SEC, and will be available on the SEC’s website located at http://www.sec.gov. Electronic copies of the prospectus supplement may be obtained, when available, from A.G.P./Alliance Global Partners, at address 590 Madison Avenue, 28th Floor, New York, NY 10022, by telephone at (212) 624-2060, or by email at prospectus@allianceg.com. The Offering may also be conducted on a private placement basis in Canada in reliance upon available exemptions from the prospectus requirements of applicable Canadian securities laws. No Canadian prospectus has been or will be filed in a province or territory of Canada to qualify the securities in connection with the Offering. The Company is relying upon the exemption set forth in Section 602.1 of the TSX Company Manual, which provides that the TSX will not apply its standards to certain transactions involving eligible interlisted issuers on a recognized exchange, such as Nasdaq.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Related Party Transaction Disclosure

The Company advises that a director of the Company may participate in the Offering. Participation by directors in the Offering is considered to be a “related party transaction” for purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying on the exemption from the formal valuation requirement in section 5.4 of MI 61-101 in reliance on sections 5.5(a) and 5.7(1)(a) of MI 61-101 as the participation of the directors is not expected to exceed 25% of the market capitalization of the Company. The Company notes that it will not file a material change report in respect of the related party transaction at least 21 days before the completion of the Offering. The Company deems this circumstance reasonable in order to complete the issuance of the Offering in an expeditious manner.

About BriaCell Therapeutics Corp.

BriaCell is a clinical-stage biotechnology company that develops novel immunotherapies to transform cancer care. More information is available at https://briacell.com/.

Safe Harbor

This press release contains “forward-looking statements” that are subject to substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release are forward-looking statements. Forward-looking statements contained in this press release may be identified by the use of words such as “anticipate,” “believe,” “contemplate,” “could,” “estimate,” “expect,” “intend,” “seek,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “target,” “aim,” “should,” “will,” “would,” or the negative of these words or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements, including those about the Offering; and the contents of all such statements and current expectations and are subject to inherent uncertainties, risks, and assumptions that are difficult to predict. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate, including the ultimate use of the proceeds of the Offering, the terms and timing of the Offering, whether the Offering will be completed, or that the closing conditions to the Offering, including TSX and approval, will be satisfied. These and other risks and uncertainties are described more fully under the heading “Risks and Uncertainties” in the Company's most recent Management’s Discussion and Analysis, under the heading "Risk Factors" in the Company's most recent Annual Information Form, and under “Risks and Uncertainties” in the Company's other filings with the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission, all of which are available under the Company's profiles on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. Forward-looking statements contained in this announcement are made as of this date, and BriaCell Therapeutics Corp. undertakes no duty to update such information except as required under applicable law.

Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

Company Contact:
William V. Williams, MD
President & CEO
1-888-485-6340
info@briacell.com

Media Relations:
Jules Abraham
CORE IR
julesa@coreir.com 

Investor Relations Contact:
CORE IR
investors@briacell.com 

FAQ

What is the total amount raised by BriaCell Therapeutics in the direct offering?

BriaCell Therapeutics raised approximately $5.0 million in the registered direct offering.

At what price are BriaCell Therapeutics shares offered in the recent direct offering?

BriaCell Therapeutics shares are offered at $2.00 each for institutional investors and $2.215 for the existing investor and director.

When will the warrants issued by BriaCell Therapeutics become exercisable?

The warrants issued by BriaCell Therapeutics will become exercisable six months from the date of issuance.

What is the expiration date for the warrants issued by BriaCell Therapeutics in the recent offering?

The warrants will expire five years from the initial exercise date.

How does BriaCell Therapeutics intend to use the proceeds from the direct offering?

BriaCell Therapeutics intends to use the proceeds for working capital, research and development, including a Phase 3 breast cancer study, patent costs, and potential share repurchases.