ChitogenX Inc (CSE:CHGX, OTCQB:CHNXF) should be able to raise the full C$6.1 million in gross proceeds it is targeting in a two-part equity raise as it progresses its trials for its ORTHO-R Rotator Cuff Tear Repair, according to analysts at Noble Capital.
The firm maintained an Outperform rating for the stock and raised its one-year price target to C$1.60 (US$1.20) from C$1.35 (US$1.05) in a note published Friday, highlighting expected strong news flow this year for the company.
“ChitogenX expects to use the net proceeds to complete enrollment of the Rotator Cuff U.S. Phase I/II clinical trial program, and for working capital and general corporate purposes,” the analysts wrote.
READ: ChitogenX looks to raise up to $6.10 million from private placements
The analysts noted that the first part of the equity raise is a best efforts private placement for up to C$4.35 million, subject to a C$3 million minimum, while the second is a non-brokered private placement of up to C$1.75 million in gross proceeds. Each of the two offerings carries the same terms priced at $0.225 per unit.
“We expect the company to raise the full $6.1 million gross proceeds,” they wrote. “As such, we expect an increase of 27.111 million shares issued during this current FY1Q 2024 (ending April 30, 2023).”
The analysts have increased their estimates for ChitogenX’s full-year 2023 loss per share slightly to C$0.12 from a loss of C$0.11 as there was no offering in the previous projections.
“Our outlook is also revised longer term on higher share count expectations,” they added. “We expect substantial news flow in calendar 2023 for both the ORTHO-R Rotator Cuff and Meniscus programs, as well as news on non-orthopedic potential opportunities for ChitogenX’s biopolymer chitosan technology.”
Contact the author at stephen.gunnion@proactiveinvestors.com