InMed Enters Into Standby Equity Purchase Agreement

Rhea-AI Summary

InMed Pharmaceuticals (NASDAQ: INM) has entered into a Standby Equity Purchase Agreement (SEPA) with YA II PN, , managed by Yorkville Advisors Global LP, on December 13, 2024. The agreement allows InMed to sell up to $10 million of common shares over a 36-month period.

The shares will be priced at 97% of the Market Price during a specified three-day pricing period. The total shares issuable are to 19.99% of outstanding shares as of the effective date, and the Investor's beneficial ownership cannot exceed 9.99%. InMed maintains the right to set minimum acceptable prices for share issuances.

Positive

• Secured access to up to $10 million in equity financing
• Flexible 36-month duration for capital raising
• Company maintains control over timing and amount of share issuances
• 3% discount to market price provides favorable pricing terms

Negative

• Potential dilution for existing shareholders
• 19.99% cap on total shares issuable may limit total available funding
• Share issuances subject to market price conditions

Insights

Financial Analyst

The $10 million Standby Equity Purchase Agreement (SEPA) with Yorkville Advisors represents a strategic financing move for InMed, but comes with notable dilution risks. The 97% pricing of market value and 19.99% share issuance cap indicate a balanced approach to capital raising, though the discount to market price suggests some pressure on share value. The 36-month duration provides extended financial flexibility, important for a small-cap pharmaceutical company with ongoing R&D needs. However, the 9.99% ownership limitation for the investor helps mitigate control risks. While this facility provides important working capital, investors should monitor the timing and size of drawdowns, as frequent utilization could impact stock price stability and existing shareholder value.

Legal Expert

This SEPA arrangement incorporates significant regulatory safeguards and compliance measures. The requirement for SEC registration statement effectiveness before share issuance demonstrates proper regulatory oversight. The inclusion of beneficial ownership limitations and pricing conditions shows careful structural consideration to protect both company and investor interests. The minimum price setting right retained by InMed provides important downside protection. The 19.99% issuance cap, unless specific pricing conditions are met, represents a standard threshold to avoid excessive dilution without shareholder approval under NASDAQ rules. These terms align with market standards for similar financing arrangements while maintaining necessary compliance frameworks.

Vancouver, British Columbia--(Newsfile Corp. - December 17, 2024) - InMed Pharmaceuticals Inc. (NASDAQ: INM) ("InMed" or the "Company"), a pharmaceutical company focused on developing a pipeline of proprietary small molecule drug candidates for diseases with high unmet medical needs, announces it entered into a Standby Equity Purchase Agreement (the "SEPA") with YA II PN, LTD (the "Investor"), an investment fund managed by Yorkville Advisors Global LP, a global investment manager, on December 13, 2024 (the "Effective Date") to sell up to $10 million in the aggregate of the Company's common shares, no value (the "Common Shares"), at any time during the 36-month period following the Effective Date of the SEPA, subject to the effectiveness of a registration statement with the Securities and Exchange Commission and other conditions set forth in the SEPA.

"This equity facility is a key component of our financing strategy, offering both flexibility and extended runway to accelerate our pharmaceutical programs and other business development initiatives," said Eric A. Adams, Chief Executive Officer of InMed. "This approach allows the Company to raise capital on an as-needed basis, maintaining control over both the timing and the amount. We are confident that Yorkville Advisors will be a valuable financial partner for our continued growth."

The total number of Common Shares issuable under the terms of the SEPA is limited to a number equivalent to 19.99% of the outstanding Common Shares as of the Effective Date unless certain pricing conditions are met, which could have the effect of limiting the total proceeds made available to the Company under the SEPA. In addition, the issuance of Common Shares under the SEPA is subject to further limitations, including that the Common Shares beneficially owned by the Investor and its affiliates will not exceed 9.99% in the aggregate.

Common Shares issued and sold to the Investor under the SEPA will be priced at 97% of the Market Price (as defined in the SEPA) during a specified three-day pricing period. InMed reserves the right to set a minimum acceptable price for these Common Share issuances.

For further information on the SEPA, including important terms and conditions, please see the Company's filings with the Securities and Exchange Commission, including the Company's Current Reports on Form 8-K filed with the Securities and Exchange Commission from time to time.

About InMed:

InMed Pharmaceuticals is a pharmaceutical company focused on developing a pipeline of proprietary small molecule drug candidates targeting the CB1/CB2 receptors. InMed's pipeline consists of three separate programs in the treatment of Alzheimer's, ocular and dermatological indications. For more information, visit www.inmedpharma.com.

Investor Contact:
Colin Clancy
Vice President, Investor Relations
and Corporate Communications
T: +1 604 416 0999
E: ir@inmedpharma.com

Cautionary Note Regarding Forward-Looking Information:

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable securities laws. Forward-looking statements are frequently, but not always, identified by words such as "expects", "anticipates", "believes", "intends", "potential", "possible", "would" and similar expressions. Such statements, based as they are on current expectations of management, inherently involve numerous risks, uncertainties and assumptions, known and unknown, many of which are beyond our control. Forward-looking information is based on management's current expectations and beliefs and is subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Without limiting the foregoing, forward-looking information in this news release includes, but is not limited to, statements about: InMed's financing strategy and availability of funds; extending the Company's runway to accelerate our pharmaceutical programs and other business development initiatives and the ability to issue shares under the SEPA; the terms and conditions of the SEPA, including the requirements to have an effective registration statement with the Securities and Exchange Commission, the ability to comply with such terms and conditions, and with respect to volume and pricing requirements; dilution that could arise from the issuance of any Common Shares pursuant to the SEPA; and the fact that there can be no assurance that any sales will occur under the SEPA, if at all.

Additionally, there are known and unknown risk factors which could cause InMed's actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. A complete discussion of the risks and uncertainties facing InMed's business is disclosed in InMed's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission on www.sec.gov.

All forward-looking information herein is qualified in its entirety by this cautionary statement, and InMed disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/234224

FAQ

What is the total value of InMed's (INM) new Standby Equity Purchase Agreement?

InMed's SEPA with Yorkville Advisors allows for the sale of up to $10 million in common shares.

How long is InMed's (INM) SEPA agreement valid?

The SEPA agreement is valid for 36 months following the December 13, 2024 effective date.

What is the pricing structure for InMed's (INM) shares under the SEPA?

Shares will be priced at 97% of the Market Price during a specified three-day pricing period.

What ownership limitations are included in InMed's (INM) SEPA?

The Investor's beneficial ownership cannot exceed 9.99%, and total shares issuable are to 19.99% of outstanding shares as of the effective date.