Psyence Biomed Announces $2.0 Million Private Placement

Rhea-AI Summary

Psyence Biomed (Nasdaq: PBM) has announced a $2.0 million private placement through the sale of 1,000,000 common shares at $2.00 per share. The offering includes series A common warrants and short-term series B common warrants, both with an exercise price of $2.00 per share. Series A warrants expire in five years while series B warrants expire in two years.

The placement, expected to close around December 24, 2024, is being managed by H.C. Wainwright & Co. as exclusive placement agent. The company plans to use the net proceeds for working capital and general corporate purposes. The securities are being offered under Section 4(a)(2) of the Securities Act and Regulation D, and the company has agreed to file a resale registration statement.

Positive

• Secured $2.0 million in immediate funding through private placement
• Potential for additional $4.0 million if all warrants are exercised ($2.0M from Series A and $2.0M from Series B)

Negative

• Dilution of existing shareholders through issuance of new shares
• Offering price of $2.00 per share includes substantial warrant coverage, indicating challenging financing terms
• Additional potential dilution if warrants are exercised

Insights

Financial Analyst

This $2.0 million private placement represents a significant capital raising effort for Psyence Biomed, though the structure is complex and potentially dilutive. The deal includes common shares, pre-funded warrants and two series of warrants with a $2.00 exercise price, matching the purchase price of the shares.

The warrant structure is particularly noteworthy - with both 5-year Series A and 2-year Series B warrants potentially adding up to 2 million additional shares if fully exercised. This could result in significant dilution but also provides additional capital raising potential of up to $4 million if all warrants are exercised.

The involvement of H.C. Wainwright as placement agent suggests professional execution, though their fees will reduce the net proceeds available to the company. The registration rights agreement indicates a plan for eventual public trading of these securities, which could provide liquidity for the investors.

For a company with a market cap around $2.7 million, this raise is substantial but the warrant overhang and dilution potential could pressure the stock price in the near term. The use of proceeds for working capital suggests immediate operational needs rather than strategic growth initiatives.

Legal Expert

The private placement's structure under Section 4(a)(2) of the Securities Act and Regulation D provides important regulatory compliance while avoiding the more extensive requirements of a public offering. The inclusion of a registration rights agreement demonstrates a balanced approach between immediate capital needs and future investor liquidity.

The dual-warrant structure with different expiration periods creates a tiered approach to potential future capitalization. The immediate exercisability of both warrant series, combined with the registration rights agreement, suggests a strategic legal framework designed to facilitate both near-term funding and longer-term flexibility.

The disclosure language regarding unregistered securities and state law compliance is comprehensive, protecting the company from regulatory scrutiny. However, the complexity of this structure may require careful ongoing compliance monitoring and could impact future financing options.

NEW YORK, Dec. 23, 2024 (GLOBE NEWSWIRE) -- Psyence Biomedical Ltd. (Nasdaq: PBM) (“Psyence Biomed” or the “Company“) today announced that it has entered into definitive agreements for the purchase and sale of an aggregate of 1,000,000 common shares (or pre-funded warrant in lieu thereof), series A common warrants to purchase up to 1,000,000 common shares and short-term series B common warrants to purchase up to 1,000,000 common shares at a purchase price of $2.00 per common share (or per pre-funded warrant in lieu thereof) and accompanying series A common warrant and short-term series B common warrant in a private placement. The series A common warrants and short-term series B common warrants will have an exercise price of $2.00 per share and will be exercisable immediately upon issuance. The series A common warrants will expire five years from the date of issuance and the short-term series B common warrants will expire two years from the date of issuance. The private placement is expected to close on or about December 24, 2024, subject to the satisfaction of customary closing conditions.

H.C. Wainwright & Co. is acting as the exclusive placement agent for the offering.

The gross proceeds from the offering are expected to be approximately $2.0 million, prior to deducting placement agent’s fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for working capital and other general corporate purposes.

The securities described above are being offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Regulation D promulgated thereunder and, along with the common shares underlying the warrants, have not been registered under the Securities Act, or applicable state securities laws. Accordingly, such securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. Pursuant to a registration rights agreement with investors, the Company has agreed to file a resale registration statement covering the securities described above.

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

About Psyence Biomed

Psyence Biomedical Ltd. (Nasdaq: PBM) is the world’s first life science biotechnology company developing nature-derived (non-synthetic) psilocybin-based psychedelic medicines to be listed on Nasdaq. Psyence is initially working to address the unmet needs of patients who suffer from mental health disorders in the context of Palliative Care. The name “Psyence” combines the words “psychedelics” and “science” to affirm Psyence Biomed’s commitment to an evidence-based approach to innovation as it works to develop safe and effective, regulatory-approved, nature-derived psychedelic therapeutics to treat a broad range of mental health disorders.

Learn more at www.psyencebiomed.com and on LinkedIn. 

Forward-looking Statements

This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements regarding the completion of the offering, the satisfaction of customary closing conditions related to the offering and the intended use of proceeds therefrom; and other statements identified by words such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning. These forward-looking statements are based on a number of assumptions.

There are numerous risks and uncertainties that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, among others: (i) market and other conditions; (ii) delays in the execution of the Phase 11B trial; (iii) the ability of Psyence Biomed to maintain the listing of its common shares and warrants on Nasdaq; (iv) the ability to implement the Nasdaq compliance plan presented to The Nasdaq Hearings Panel; (v) the success of negotiations with Optimi Health Corp.; and (vi) volatility in the price of the securities of Psyence Biomed due to a variety of factors, including the recent share consolidation, changes in the competitive and highly regulated industries in which Psyence Biomed operates, variations in performance across competitors, changes in laws and regulations affecting Psyence Biomed’s business and changes in Psyence Biomed’s capital structure. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the Company’s Form 20-F filed with the Securities and Exchange Commission (the “SEC”) on July 29, 2024 and other documents filed by Psyence Biomed from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Actual results and future events could differ materially from those anticipated in such information. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Except as required by law, Psyence Biomed does not intend to update these forward-looking statements.

The Company does not make any medical, treatment or health benefit claims about its proposed products. The U.S. Food and Drug Administration, Health Canada or other similar regulatory authorities have not evaluated claims regarding psilocybin, psilocybin analogues, or other psychedelic compounds or nutraceutical products. The efficacy of such products has not been confirmed by approved research. There is no assurance that the use of psilocybin, psilocybin analogues, or other psychedelic compounds or nutraceuticals can diagnose, treat, cure or prevent any disease or condition. Vigorous scientific research and clinical trials are needed. The Company has not conducted clinical trials for the use of the proposed products. Any references to quality, consistency, efficacy, and safety of potential products do not imply that the Company has verified such in clinical trials or that the Company will complete such trials. If the Company cannot obtain the approvals or research necessary to commercialize its business, it may have a material adverse effect on the Company’s performance and operations.

Contact Information

Email: ir@psyencebiomed.com
Media Inquiries: media@psyencebiomed.com
General Information: info@psyencebiomed.com
Phone: +1 416-477-1708

Investor Contact:
Jeremy Feffer
Managing Director
LifeSci Advisors
jfeffer@lifesciadvisors.com

FAQ

How much money did Psyence Biomed (PBM) raise in its December 2024 private placement?

Psyence Biomed raised $2.0 million in gross proceeds through the private placement announced on December 23, 2024.

What is the exercise price of PBM's warrants issued in the December 2024 private placement?

Both Series A and Series B warrants have an exercise price of $2.00 per share.

When do the warrants issued in PBM's December 2024 private placement expire?

Series A warrants expire five years from issuance, while Series B warrants expire two years from issuance.

How many shares were offered in PBM's December 2024 private placement?

The private placement included 1,000,000 common shares along with warrants to purchase up to 2,000,000 additional shares.

How will PBM use the proceeds from its December 2024 private placement?

The company intends to use the net proceeds for working capital and other general corporate purposes.