Zynerba Pharmaceuticals (NASDAQ:ZYNE) Inc said it has entered into an equity purchase agreement for up to $20 million with Chicago-based institutional investor Lincoln Park Capital Fund LLC (LPC), in a move that will provide the company with financial flexibility in the clinical development of its Zygel CBD gel.
Under the terms of the deal, Zynerba will have the right, but not the obligation, to sell to LPC up to $20 million worth of shares of its common stock over the 36-month term of the agreement.
The company said it intends to use any net proceeds from the sale of its common stock to LPC for working capital and general corporate purposes, including research and development expenses and capital expenditures.
"We are excited to enter into this transaction with Lincoln Park Capital and believe that this agreement provides us with another opportunity to access capital in an efficient manner," Jim Fickenscher, chief financial officer and vice president, corporate development of Zynerba said in a statement.
READ: Zynerba Pharmaceuticals reports positive results from Phase 2 trial of Zygel CBD gel in 22q11.2 Deletion Syndrome
"The financial flexibility provided by this agreement will further support our clinical development efforts with Zygel in Fragile X syndrome and 22q11.2 deletion syndrome," he added.
Zynerba said it controls the timing and amount of any future sales of its shares of common stock and LPC is obligated to make purchases in accordance with the terms of the purchase agreement, subject to various limitations including those under Nasdaq listing rules.
Any common stock that is sold by Zynerba will occur at a purchase price that is based on the market prices prevailing at the time of each sale to LPC. There is no upper limit to the price per share that LPC may pay for future stock issuances under the purchase agreement, and LPC has agreed not to cause or engage in any direct or indirect short selling or hedging of Zynerba's common stock.
No warrants are being issued in the transaction and the purchase agreement does not contain any rights of first refusal, participation rights, penalties or liquidated damages provisions in favor of any party.
Zynerba said it may terminate the purchase agreement at any time, at its sole discretion, without any cost or penalty.
The company also provided a financial outlook, saying it believes its $69.7 million of cash and cash equivalents as of March 31, 2022, are sufficient to fund planned operations and capital requirements through the end of 2023 or into early 2024, after the expected availability of top-line results from its confirmatory pivotal phase 3 RECONNECT trial of Zygel in patients with Fragile X syndrome.
Zynerba Pharmaceuticals is the leader in innovative pharmaceutically-produced transdermal cannabinoid therapies for rare and near-rare neuropsychiatric disorders, and is committed to improving the lives of people living with severe, chronic health conditions including Fragile X syndrome, 22q11.2 deletion syndrome and autism spectrum disorder.
Contact the author at jon.hopkins@proactiveinvestors.com