BioHarvest Sciences Inc has announced a private placement of up to C$8 million of two-year convertible notes that will predominantly support the rapidly expanding biotech’s growth in its polyphenols and antioxidants vertical.
The biotech, which is listed on the Canadian Securities Exchange and has offices in Rehovot, Israel, said the funds will support the research and development program for potentially providing active pharmaceutical ingredients (APIs) to the pharma industry based on its botanical compositions.
In a statement, BioHarvest CEO Ilan Sobel said: "The renewed focus on our core business is a blessing for our shareholders. Not only is it consistent with our biotech health and wellness vision, it enables us to responsibly execute on our goals with a less dilutive approach.”
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“Our strategy and priorities are sound. We are better positioned to deliver on what would make BioHarvest achieve the enterprise value worthy of a leading biotech innovator."
BioHarvest has recently provided guidance for 2023 expected revenue to be in the range of US$17-to-US$20 million, with a cash flow breakeven target for the fourth quarter. On February 9, BioHarvest emphasized that it is laser-focused on the growth of its core polyphenols business, the development of pharma-grade cannabis compositions, and the expansion of its clinical studies to support both the nutraceuticals and pharma verticals.
Less shareholder dilution
The revised focus will enable BioHarvest to require fewer funds to achieve its 2023 financial targets and will likely result in less shareholder dilution, said the company.
Meanwhile, the notes will have a term of 24 months, and pay interest of 9% per annum, it added. BioHarvest said the notes will be “convertible as to principal and accrued interest,” at the option of the holder, at any time from their issuance into common shares, at a price equal to the closing market price of BioHarvest’s shares on the date of conversion, less a discount of 20%, but in any event not less than $0.32 per share, and not higher than a ceiling price equal to $0.75 if converted within the term of the notes.
As an incentive for early conversion, investors that convert their investment within the first year of the term of the notes will receive a warrant for each $0.40 converted, said the company. Each early conversion warrant will be exercisable to buy a company share at a price of $0.40 per share for a period expiring one year from the closing of the private placement of the notes.
In addition, investors who funnel a minimum of $2.7 million will also receive an additional warrant for each $0.40 invested. Each major investment warrant will be exercisable for a period of one year from the closing of the private placement to buy a common share at $0.40 per share.
BioHarvest said that it will pay commissions and other sales incentives to registered brokers or investment dealers.
The company’s proposed private placement will only be available to qualified investors.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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