Algernon Pharmaceuticals Inc. (CSE:AGN, OTCQB:AGNPF) said it has closed its previously announced non-brokered private placement in the amount of 373,900 units at a price of $3.75 each for gross proceeds of $1,402,125.
The company said it will use the proceeds from the offering to fund research and development programs, general and administrative expenses and for working capital purposes.
Each unit consists of one Class A common share in the capital of the company and one common share purchase warrant. Each warrant will entitle the holder to acquire one common share at an exercise price of $4.25 each until August 22, 2027, subject to acceleration.
READ: Algernon Pharmaceuticals announces non-brokered private placement
The warrants are subject to accelerated expiry in the event the volume weighted average trading price of Algernon common shares exceeds $12.75 for 20 consecutive trading days, the company may, within 10 business days of the occurrence of such event, deliver a notice to the holders accelerating the expiry date of the warrants to not less than 30 days following the date of such notice and the issuance of a press release by the company. Any unexercised warrants shall automatically expire at the end of the accelerated exercise period.
In connection with the closing of the offering, the company said it paid cash finder's fees in the aggregate amount of $122,850 and issued a total of 20,480 finder's warrants to eligible finders. The finder's warrants are non-transferable common share purchase warrants exercisable for one common share at a price of $4.125 each until August 22, 2027, and are subject to the same acceleration provision as the warrants in the placement.
The securities issued and issuable in connection with the closing of the offering will be subject to a statutory hold period of four months plus a day from the date of issuance in accordance with applicable securities legislation.
The securities have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, "US persons" (as defined in Regulation S under the US Securities Act) absent registration or an applicable exemption from the registration requirements of the US Securities Act and applicable US state securities laws.
Algernon also said it has also engaged GRA Enterprises LLC of Mooresville, North Carolina to provide investor relations services under a consulting agreement dated August 22, 2022. Services will include the production and publication of investor bulletins, distribution of investor bulletins to the consultant's e-mail list, and posts via the consultant's blogs and social media accounts.
In consideration of these services, the company will pay the consultant a fee of US$100,000 for a 12-month contract. The agreement with the consultant is subject to acceptance by the Canadian Securities Exchange.
AlphaNorth Asset Management holding increases
In a separate statement, Algernon also announced that its largest shareholder, AlphaNorth Asset Management has increased its ownership position in the company by acquiring 150,000 shares in the recent private placement.
As a result, AlphaNorth now beneficially owns or has control or direction over, directly, or indirectly, 307,610 common shares of the company, increasing its equity interest in Algernon to over 13%.
"We are very pleased with this major show of support by AlphaNorth, as well as their ongoing faith in Algernon's unique drug repurposing model and development pipeline," said Christopher J. Moreau CEO of Algernon in a statement. "We continue to be very focussed on advancing our drug compounds through clinical stage testing and we look forward to continuing to update the market as we progress."
Steve Palmer CEO of AlphaNorth said: "We believe the weakness in the recent share price has provided a great opportunity to increase our position in Algernon."
"Our increased investment confirms our support for the drug pipeline they are developing as well as our strong belief in management. Algernon's recent topline data from its Ifenprodil IPF and chronic cough study was very impressive, and we are excited about its potential in a Phase 2b human trial. They are also working to move forward with their planned Phase 1 study of DMT for stroke which is a major global medical issue urgently in need of new drug treatment options," Palmer added.
Founded in 2007, AlphaNorth Asset Management is a Toronto-based investment manager. AlphaNorth believes that superior long-term equity returns are achievable by exploiting inefficiencies in the Canadian small-cap universe through careful security selection on both a long and short basis.
Algernon Pharma is a drug re-purposing company that investigates safe, already approved drugs, including naturally occurring compounds, for new disease applications, moving them efficiently and safely into new human trials, developing new formulations and seeking new regulatory approvals in global markets. Algernon specifically investigates compounds that have never been approved in the US or Europe to avoid off-label prescription writing.
Contact the author at jon.hopkins@proactiveinvestors.com