Shares of Celadon Pharmaceuticals PLC (AIM:CEL) dropped 20% after the company announced a £1.05 million equity fundraiser in which new stock was sold at a discount price.
The developer of cannabis-based medicines issued 2.625 million new shares at 40 pence each — 23.8% below the prior day's closing price of 52.5 pence.
Global Investment Strategy UK Limited handled the placing and will receive a cash fee along with warrants for 131,250 new shares.
Celadon has faced financial challenges, citing delays in funding from a previous equity round and a drawdown from a credit facility.
Both the equity subscriber and the lender have reconfirmed their intention to pay, though the company noted the uncertainty surrounding the timeline.
As of 10 September, Celadon had just £48,000 in cash. The proceeds from the latest investment round will bring available resources to £1.046 million, expected to sustain operations until December with careful creditor management.
Celadon continues discussions with potential institutional lenders for long-term debt refinancing but reports limited progress.
The shares were off 10.5p at 42p.