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Edesa Biotech’s Founder Makes Strategic Investment in the Company

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Edesa Biotech (Nasdaq:EDSA) announced a strategic investment agreement with an entity affiliated with its CEO and Founder, Par Nijhawan, MD, for up to $5.0 million, including an immediate investment of $1.5 million. The investment involves purchasing Series A-1 Convertible Preferred Shares at $10,000 per share, convertible into common shares at $3.445, and warrants exercisable for 75% of the convertible common shares. The warrants will expire in five years. The company also terminated a previous $10 million revolving credit agreement with the purchaser, from which no funds were drawn.

Edesa Biotech (Nasdaq:EDSA) ha annunciato un accordo di investimento strategico con un'entità affiliata al suo CEO e Fondatore, Par Nijhawan, MD, fino a 5,0 milioni di dollari, inclusi un investimento immediato di 1,5 milioni di dollari. L'investimento prevede l'acquisto di Azioni Preferenziali Convertibili di Serie A-1 a 10.000 dollari per azione, convertibili in azioni ordinarie a 3,445 dollari, e warrant esercitabili per il 75% delle azioni ordinarie convertibili. I warrant scadranno tra cinque anni. L'azienda ha inoltre terminato un precedente accordo di credito revolving da 10 milioni di dollari con l'acquirente, dal quale non sono stati prelevati fondi.

Edesa Biotech (Nasdaq:EDSA) anunció un acuerdo de inversión estratégica con una entidad afiliada a su CEO y Fundador, Par Nijhawan, MD, por un monto de hasta 5,0 millones de dólares, incluyendo una inversión inmediata de 1,5 millones de dólares. La inversión implica la compra de Acciones Preferentes Convertibles de Serie A-1 a 10,000 dólares por acción, convertibles en acciones ordinarias a 3.445 dólares, y warrants ejercitables por el 75% de las acciones comunes convertibles. Los warrants vencerán en cinco años. La compañía también terminó un acuerdo previo de crédito revolving de 10 millones de dólares con el comprador, del cual no se retiraron fondos.

Edesa Biotech (Nasdaq:EDSA)는 CEO이자 설립자인 Par Nijhawan, MD와 관계된 기관과 최대 500만 달러의 전략적 투자 계약을 체결했다고 발표했습니다. 여기에는 150만 달러의 즉각적인 투자가 포함됩니다. 이 투자는 주당 10,000달러에 A-1 시리즈 전환 우선주를 구매하는 것으로, 일반 주식으로 3.445달러에 전환 가능하며, 전환된 일반 주식의 75%에 대한 워런트가 포함되어 있습니다. 이 워런트는 5년 후에 만료됩니다. 회사는 또한 구매자와의 이전 1,000만 달러 회전 신용 계약을 종료했으며, 이 계약에서 자금은 사용되지 않았습니다.

Edesa Biotech (Nasdaq:EDSA) a annoncé un accord d'investissement stratégique avec une entité affiliée à son PDG et fondateur, Par Nijhawan, MD, pour un montant allant jusqu'à 5,0 millions de dollars, y compris un investissement immédiat de 1,5 million de dollars. L'investissement concerne l'achat d'actions privilégiées convertibles de série A-1 au prix de 10 000 dollars par action, pouvant être converties en actions ordinaires au prix de 3,445 dollars, ainsi que des bons de souscription exercables pour 75% des actions ordinaires convertibles. Les bons de souscription expireront dans cinq ans. L'entreprise a également résilié un précédent accord de crédit revolving de 10 millions de dollars avec l'acheteur, dont aucun fonds n'a été tiré.

Edesa Biotech (Nasdaq:EDSA) hat eine strategische Investitionsvereinbarung mit einer mit seinem CEO und Gründer Par Nijhawan, MD, verbundenen Einheit über bis zu 5,0 Millionen Dollar bekannt gegeben, einschließlich einer sofortigen Investition von 1,5 Millionen Dollar. Die Investition umfasst den Kauf von A-1 Series Convertible Preferred Shares zu 10.000 Dollar pro Aktie, die in Stammaktien zu 3,445 Dollar umwandelbar sind, sowie Warrants, die für 75% der umwandelbaren Stammaktien ausgeübt werden können. Die Warrants laufen in fünf Jahren ab. Das Unternehmen hat zudem eine zuvor bestehende revolvierende Kreditvereinbarung über 10 Millionen Dollar mit dem Käufer beendet, aus der keine Mittel abgerufen wurden.

Positive
  • CEO demonstrates confidence through personal investment of up to $5.0 million
  • Immediate capital injection of $1.5 million strengthens company's financial position
  • Investment structure includes warrant coverage providing potential additional funding
Negative
  • Transaction may result in future shareholder dilution through preferred share conversion and warrant exercise
  • Requires shareholder approval for investments exceeding $2.0 million under Canadian securities laws

Insights

The $5 million investment commitment from the CEO, including an immediate $1.5 million injection, represents a significant vote of confidence in EDSA's future. The structure of the deal through Series A-1 Convertible Preferred Shares with a $3.445 conversion price and additional warrants provides both immediate capital and potential future funding. The 75% warrant coverage and 5-year exercise period offer substantial upside potential for the company.

The termination of the previous $10 million revolving credit facility, which remained unused, in favor of this equity investment demonstrates a strategic shift from debt to equity financing. This structure better aligns with the company's current development stage and reduces potential future debt burden. The 10% per annum return feature on the preferred shares indicates a premium cost of capital, reflecting the company's early-stage status.

TORONTO, Oct. 31, 2024 (GLOBE NEWSWIRE) -- Edesa Biotech, Inc. (Nasdaq:EDSA), a clinical-stage biopharmaceutical company focused on developing host-directed therapeutics for immuno-inflammatory diseases, today announced that the company has entered into a purchase agreement with an entity affiliated with Par Nijhawan, MD, Edesa’s Chief Executive Officer and Founder, to invest up to $5.0 million in the company, including an immediate investment of approximately $1.5 million.

The entity will purchase shares of the company’s Series A-1 Convertible Preferred Shares, as amended (the “Series A-1 Preferred Shares”), having a stated value of $10,000 per share, and warrants (the “Warrants”) to purchase the company’s common shares in a transaction structured as an at-the-market issuance under Nasdaq rules. The Series A-1 Preferred Shares will be convertible into the company’s common shares at a conversion price of $3.445. The Warrants will be exercisable for a number of common shares equal to 75% of the common shares initially issuable upon the conversion of the Series A-1 Preferred Shares.

Commenting on today’s announcement, Dr. Nijhawan said “I am pleased to demonstrate my strong belief in Edesa’s future growth opportunities and my continuing commitment to lead the company’s strategic initiatives. I believe Edesa has a strong development pipeline, and I am confident that we can continue to build on our operational and clinical success.”

Subject to certain exceptions and adjustments for share splits, each Series A-1 Preferred Share is convertible into a number of Edesa’s common shares calculated by dividing (i) the sum of the stated value of the Series A-1 Shares being converted plus a return equal to 10% of such stated value per annum by (ii) the conversion price. The Warrants will have an exercise price of $3.445 per share, will be exercisable immediately upon issuance and will expire five years from the date of issuance. Under applicable Canadian securities laws, purchases of Series A-1 Preferred Shares under the purchase agreement in an aggregate amount greater than $2.0 million will be subject to the prior approval of the company’s shareholders, excluding Dr. Nijhawan. The company also announced that in connection with the transactions contemplated by the purchase agreement, the $10 million revolving credit agreement previously entered into with the purchaser has been terminated. The company did not draw any funds from the facility.

The securities described above have not been and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

About Edesa Biotech, Inc.

Edesa Biotech, Inc. (Nasdaq: EDSA) is a clinical-stage biopharmaceutical company developing innovative ways to treat inflammatory and immune-related diseases. Its clinical pipeline is focused on two therapeutic areas: Medical Dermatology and Respiratory. In Medical Dermatology, Edesa is developing EB06, an anti-CXCL10 monoclonal antibody candidate, as therapy for vitiligo, a common autoimmune disorder that causes skin to lose its color in patches. Its medical dermatology assets also include EB01 (1.0% daniluromer cream), a Phase 3-ready asset developed for use as a potential therapy for moderate-to-severe chronic Allergic Contact Dermatitis (ACD), a common occupational skin condition. The company’s most advanced Respiratory drug candidate is EB05 (paridiprubart), which is being evaluated in a U.S. government-funded platform study as a treatment for Acute Respiratory Distress Syndrome (ARDS), a life-threatening form of respiratory failure. The EB05 program has been the recipient of two funding awards from the Government of Canada to support the further development of this asset. In addition to EB05, Edesa is preparing an investigational new drug application (IND) in the United States for EB07 (paridiprubart) to conduct a future Phase 2 study in patients with pulmonary fibrosis. Sign up for news alerts. Connect with us on X and LinkedIn.

Edesa Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by the use of words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "may," "will," "would," "could," "should," "might," "potential," or "continue" and variations or similar expressions, including statements related to: the company’s belief that Dr. Nijhawan’s investment is strategic and demonstrates a strong belief in Edesa’s future growth opportunities and a continuing commitment to lead the company’s strategic initiatives; the company’s belief that it has a strong development pipeline; the company’s confident belief that it can continue to build on its operational and clinical success; and the company's timing and plans regarding its clinical studies in general. Readers should not unduly rely on these forward-looking statements, which are not a guarantee of future performance. There can be no assurance that forward-looking statements will prove to be accurate, as all such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results or future events to differ materially from the forward-looking statements. Such risks include: the ability of Edesa to obtain regulatory approval for or successfully commercialize any of its product candidates, the risk that access to sufficient capital to fund Edesa's operations may not be available or may be available on terms that are not commercially favorable to Edesa, the risk that Edesa's product candidates may not be effective against the diseases tested in its clinical trials, the risk that Edesa fails to comply with the terms of license agreements with third parties and as a result loses the right to use key intellectual property in its business, Edesa's ability to protect its intellectual property, the timing and success of submission, acceptance and approval of regulatory filings, and the impacts of public health crises. Many of these factors that will determine actual results are beyond the company's ability to control or predict. For a discussion of further risks and uncertainties related to Edesa's business, please refer to Edesa's public company reports filed with the U.S. Securities and Exchange Commission and the British Columbia Securities Commission. All forward-looking statements are made as of the date hereof and are subject to change. Except as required by law, Edesa assumes no obligation to update such statements.


FAQ

How much is Edesa Biotech's (EDSA) CEO investing in the company?

Edesa Biotech's CEO, through an affiliated entity, is investing up to $5.0 million, with an immediate investment of $1.5 million.

What is the conversion price for Edesa Biotech's (EDSA) Series A-1 Preferred Shares?

The Series A-1 Preferred Shares are convertible into common shares at a conversion price of $3.445.

What are the terms of the warrants issued in Edesa Biotech's (EDSA) investment agreement?

The warrants are exercisable at $3.445 per share for 75% of the convertible common shares, with immediate exercisability and a five-year expiration period.

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