Q BioMed Inc (OTCQB:QBIO) has unveiled its largest single investment so far, with Aedesius Holdings Ltd (AedesiusOne), a privately held global disruption aggregator, investing up to $30 million in the company via a securities agreement.
The biotech accelerator noted that AedesiusOne is run by Geoffrey Fatzinger, Q BioMed's global head of regulatory affairs.
"Obviously this is a very impactful investment for Q BioMed. Not only does it come from an insider, but it is the largest single investment we have ever had. It allows us to move forward with our pre-covid commercial roll-out plans for Strontium89 on a worldwide basis," said Denis Corin, Q BioMed CEO, in a statement.
READ: Q BioMed touts development progress of coronavirus treatment MAN-19 and other therapies in letter to shareholders
Corin added: "This funding also gives us the ability to advance our therapeutic development and pipeline opportunities and reduce the financing risk that typically overhangs small-cap biotech companies with 18 months of cash before taking into account the income that we expect from our Strontium89 revenues.
"Further, we will be in a position to extinguish all remaining debt and convert all outstanding preferred shares, thereby increasing our shareholder equity and positioning the company for an uplisting. Strategically, we also expect to review our pipeline, specifically with regards to adding one or more late-stage assets through acquisition or licensing."
The agreement gives AedesiusOne the opportunity to buy around 43% of the outstanding Q BioMed shares for a total of $30 million.
There is an initial investment of $5 million with an additional $15 million by September 30, 2021, with 50% warrant coverage allowing a further $10 million investment within 120 days.
The unit price is set at $1.25 per share, which is a 31% premium to yesterday's closing price.
The investor is expected to ultimately take a seat on the board.
In the statement, Fatzinger, founder and chairman of AedesiusOne, said the company was "aggregating several healthcare businesses under its umbrella".
"AedesiusOne was founded to be a platform to launch positive and needed disruption in many markets, with healthcare and medicine being one of the cornerstones," he said.
"Having spent the last 30 years in this space and playing a part in the development and commercialization of hundreds of drugs and devices worldwide, I believe investing in and working with Q BioMed long-term is a great way to help accelerate the development of key therapies that are much needed and neglected in the pharma and medical technology space, while investing in an extremely under-valued asset."
The post-money Q BioMed valuation after the initial closings will be around $58 million using a purchase price of $1.25, which is a market cap valuation and net equity level required for listing on a national exchange. Assuming exercise of the warrants and using the same valuation, the Q BioMed market cap will be around $70 million.
Shares in Q BioMed in New York on Tuesday added 8.44% to $1.03 each.
Contact the author at giles@proactiveinvestors.com