ChitogenX Inc (CSE:CHGX, OTCQB:CHNXF) has announced a non-brokered private placement offering of 12,500,000 units at a price of $0.20 each for gross proceeds of $2.5 million.
The Montreal-based clinical-stage regenerative medicine company said the total insider commitments in the new offering "currently stand at $0.7 million."
According to ChitogenX, the financing will boost the company’s balance sheet by eliminating $5.6 million of short-term liabilities, including the extension of the $3 million secured debenture maturity date from November 27, 2023, to February 1, 2025, in exchange for a new $0.35 per share conversion option, as well as the conversion of $3 million worth of debentures maturing on May 1, 2023, including accrued interest.
The firm said that a previously announced private placement has been terminated.
"We welcome new investors and are appreciative of the continued support demonstrated by insiders and investors who have committed further capital to this financing, or supported the balance sheet restructuring as we continue to make significant progress with patients' enrollment in our US Phase I/II rotator cuff tear repair trial," ChitogenX CEO Philippe Deschamps said in a statement.
US Phase I/II rotator cuff repair
The US Phase I/II clinical trial is a blinded, randomized controlled study investigating the safety of ORTHO-R for rotator cuff tear repair compared with the standard of care in a total of 78 patients at 10 clinical sites throughout America during the initial safety phase.
"This financing combined with the recently secured $3.5 million grant in partnership with Polytechnique Montréal as well as anticipated savings for conducting and completing our Phase I/II trial, will facilitate achieving important milestones over the coming year," added Deschamps.
The company said it will use the proceeds of the new offering to complete enrollment of the rotator cuff tear repair US phase I/II clinical trial program, and for working capital and general corporate purposes.
ChitogenX said that each $0.20 unit will consist of one class A share of the company and one share purchase warrant. Each warrant will entitle the holder to buy a share at a price of $0.35 per warrant share at any time on or before the date which is 60 months after the closing date of the new offering.
If at any time after six months following the closing date, the daily volume weighted average trading price of the shares on the Canadian Securities Exchange is greater than $0.50 per share for the preceding 10 consecutive trading days, ChitogenX will have the right to accelerate the expiry date of the warrants to a date that is at least 30 days following the date of such notice to holders of warrants.
The shares and the warrants will be subject to a four-month hold period and the offering is expected to close on or about April 14, 2023.
Although the new offering is non-brokered, the company will pay finders' fees of 8% of the gross proceeds raised from accredited investors introduced to the company by a finder in cash. Similarly, finders' warrants will equal to 8% of the number of units issued to accredited investors and each finder's warrant entitles the holder to one share at a purchase price of $0.35 for a period of 24 months from the date of issuance of the finders' warrants.
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