SynAct Pharma raises 60,5 MSEK through a directed share issue
Biotech company SynAct Pharma has decided to carry out a directed share issue of approximately 60,5 Mkr to an entity managed by Heights Capital Management. The funding enables the continued development of their primary drug candidate resomelagon. The capital will also be used for business development activites.
Most treatments used today to treat inflammation suppress the immune system, which can lead to an increased risk of side effects and other safety issues. SynAct Pharma is a clinical-stage biotech company that utilizes the melanocortin system to induce anti-inflammatory and inflammation resolution mechanism – without suppressing the immune system.
The company has a broad portfolio of selective melanocortin agonists for the treatment of autoimmune and inflammatory diseases. The drug candidate resomelagon (AP1189) is the lead candidate in the portfolio.
The clinical programs require funding
In September, SynAct announced top line data from the 12-week phase IIb clinical trial EXPAND in patients with severe, newly diagnosed rheumatoid arthritis. The results showed that the primary endpoint for the trial was not met. However, the company has since presented subgroup results demonstrating the candidate’s efficacy in patients with elevated CRP levels.
Later in October, SynAct is expecting to report the results from the ongoing clinical phase IIa study RESOLVE part A, which is focused on patients with inadequate response to DMARD treatment (DMARD-IR patients). Given the current status of the clinical programs, the company’s board of directors has concluded that the company is in need of swift financing to meet the short-term needs. The cash balance at the end of Q2 amounted to 44 MSEK.
Directed share issue to US company
To drive further development, it has now been decided to carry out a directed issue of shares and warrants that will generate initial gross proceeds of 60,5 Mkr. The issue is directed to a company managed by the American private equity firm Heights Capital Management.
The new shares are issued at a subscription price of 16,14 SEK per share, while the warrants are given free of charge and have a subscription price of 17,75 SEK. At the time of writing, the share price is 17,26 SEK.
The warrants may be exercised for subscription of new shares until 13 October 2025, on a maximum of four occasions during the subscription period.
The dilution that will occur due to the directed share issue is estimated to approximately 10,5 per cent of the number of shares and votes in the company. If the warrants are exercised in full, the dilution will increase by an additional approximately 8,7 per cent.
The proceeds will be used in the continued development
SynAct intends to use the proceeds of approximately 60,5 MSEK for continued development of resomelagon through clinical phase II studies in order to show proof-of-concept. The proceeds will also be used for the development of the TXP portfolio, which was acquired in January 2023. The initial proceeds and the company’s current cash is expected to meet the company’s working capital needs until the third quarter of 2024.
If the warrants are fully exercised, the company will receive additional proceeds of approximately 59,9 MSEK, which will be used to initiate studies and further advance the company’s development plan.
The company’s CEO Torbjørn Bjerke commented on the capital raise in a press release:
“We are very happy to announce this deal, providing funds to continue development of our pipeline with the focus on resomelagon. In addition, the funds will secure our efforts in business development aiming at finding the right partner for resomelagon.”
The content of BioStock’s news and analyses is independent but the work of BioStock is to a certain degree financed by life science companies. The above article concerns a company from which BioStock has received financing.
