The proceeds from Chimeric Therapeutics Ltd (ASX:CHM)’s $18.1 million rights offer are anticipated to fund payments under the company’s license and sponsored research agreements, in addition to the phase 1 clinical trials, according to Diamond Equity Research.
While this offering if successful, would result in additional shares issued, Diamond Equity believes the most important aspect at this stage of development is reaching key data readouts and advancing the overall pipeline, which this capital would facilitate.
The following is an extract from Diamond Equity’s research update:
- Chimeric Entitlement Offer Targets Approximately $18.1 Million Additional Capital – Chimeric is targeting a capital raise of $18.1 million (excluding offering expenses), the offer price of A$0.17 is a discount of 15% to the last trading price of shares and an 18.3% discount to 5-day volume weighted average price. The Entitlement Offer consists of both an institutional and retail component, with the offering managed by Bell Potter Securities Limited, with additional details accessible in the filing and press release. The offering provides for eligible shareholders to subscribe for 1 new ordinary share for each 3.15 existing share. Additionally, for each share issued an option will be issued with an exercise price of A$0.255 with an expiration date of March 31, 2024 (subject to change).
- Capital Provides Longer Runway to Data Readout – Given the overall volatility in the capital markets recently, having capital to reach data readouts in early-stage biotechnology is critical. The proceeds from the entitlement offering are anticipated to fund payments under the company’s license and sponsored research agreements, in addition to the phase 1 clinical trials. Proceeds from the offering will also be used for working capital and to pay respective costs of the offering. While this offering if successful, would result in additional shares issued, we believe the most important aspect at this stage of development is reaching key data readouts and advancing the overall pipeline, which this capital would facilitate.
- Recent Financials in Line with Expectations - Chimeric Therapeutics reported spending of roughly A$2 million less than anticipated in the IPO prospectus. Research and Development expenditures were roughly 50% less than expected, largely related to delays in bringing on staff during the pandemic. Chimeric Therapeutics recently reported interim phase 1 trial results for its rGBM immunotherapy. The trial results showed promising safety data and a disease control rate of 75% in 3 out of 4 patients treated. There was no dose-limiting toxicity aside from one subject patient who developed cerebral edema. The initial trial results confirm the correlation between the MMP-2 marker and CLTX binding supporting the rationale to explore MMP-2 as a corrective marker. We see this early-stage data as encouraging as the company progresses further with its phase 1 trial using higher dose levels and dual-routes of administration. Chimeric Therapeutics will extend its existing pipeline of antigen receptors (CLTX AND CDH17) based immunotherapies towards NK cells. CAR allows the engineering of NK cells providing specificity to target the intended cells. The company is expected to leverage the clinically validated NK cell platform to develop CLTX CAR-NK, CDH17 CAR-NK, CHM 3301 (target undisclosed) and CHM 0301 a next generation CORE-NK platform (targeting blood cancer combination therapies).