RALEIGH – Innovate Biopharmaceuticals has reached a deal with investors to raise millions in capital as it gears up for a stage 3 clinical trial of its lead drug candidate.
The company laid out terms for the deal on Monday ahead of a financial update scheduled to be delivered Tuesday:
- Some 4.3 million shares at $2.33 per share
- Another 2.575 million shares at $4 per share
- And 4.3 million shares with a longer warrant term at $4 per share
The total of 6.87 million shares has the potential to generate more than $30 million.
Innovate shares closed at $2.48, up 23 cents.
The deal is with SDS Capital Partners II LLC and other investors.
Its lead compound, INN-202, targets celiac disease. It is a type of inflammatory bowel disease that affects 3 million people in the United States and about 15 million worldwide.
In the announcement, Innovate spelled out terms for the stock deal:
“The 12 month warrants will be immediately exercisable at a price of $4.00 per share for one year, and the five year warrants will be exercisable beginning on the six month anniversary of their issuance at a price equal to the greater of (a) 125% of the volume weighted average price of the Common Stock for the 20 day period prior to the closing date of the private placement and (b) the closing price of the Common Stock immediately prior to the closing date of the private placement. If the volume weighted average price of our stock exceeds $5.25 for 10 consecutive days following their issue dates, we will have the right to call the 12 month warrants for cash exercise. The exercise prices of the warrants will be subject to adjustment for, among other things, stock splits, reverse splits, and similar capital transactions, and the warrant holders will have certain rights on an as-exercised basis as holders of Common Stock in the event of certain distributions and fundamental transactions. The warrants will be exercisable on a “cashless” basis only in certain circumstances.”
Innovate focuses on developing novel medicines for autoimmune and inflammatory diseases with unmet needs. Their pipeline includes drug candidates for celiac disease, NASH, Crohn’s, and ulcerative colitis.
In February, the company announced the departure of CEO Christopher Prior to pursue other opportunities. Sandeep Laumas was appointed as Innovate’s CEO.
Laumas said, “Our team remains focused on meeting our business goals of having the first to market treatment for celiac disease and creating long-term value for our shareholders.”
North Carolina Business News Wire, a service of the UNC-Chapel Hill School of Media and Journalism, contributed to this story.