VICTORIA, BC, Oct. 31,
2024 /PRNewswire/ - Eupraxia Pharmaceuticals Inc.
("Eupraxia" or the "Company") (TSX: EPRX) (NASDAQ: EPRX), a
clinical-stage biotechnology company leveraging its proprietary
DiffuSphere™ technology to optimize drug delivery for applications
with significant unmet need, is pleased to announce that it has
completed a non-brokered private placement of 8,905,638 Series 1
Preferred shares of the Company (the "Preferred
Shares"), at a price of C$5.00 per
Preferred Share for aggregate gross proceeds of C$44,528,190, by way of a non-brokered private
placement (the "Private Placement").
The Company intends to use the net proceeds from the Private
Placement towards the funding of clinical trials for EP104GI,
initiating research programs for new candidates and general
corporate and working capital purposes of the Company and its
affiliates.
In connection with the closing of the Private Placement, the
Company has appointed Mr. Joseph
Freedman to its board of directors. Mr. Freedman is a
private equity investor and corporate director with more than 25
years industry experience including, most recently, 18 years at
Brookfield Asset Management, one of the world's leading private
equity and alternative asset management firms. Over his career at
Brookfield, Mr. Freedman has held
a number of positions, including Vice Chair of Private Equity,
General Counsel and the Partner responsible for M&A
transaction execution, fund formation and fund operations. Prior to
joining Brookfield, he was a
lawyer in the corporate finance group at a Toronto law firm, specializing in private
equity transactions and public company mergers and acquisitions.
Now retired from Brookfield, Mr.
Freedman is a director of several private and public companies and
non-profit organizations including the Centre for Aging and Brain
Health Innovation (co-chair), Bridgemarq Real Estate Services
(TSX:BRE) and Total Containment Inc. Mr. Freedman holds a joint
MBA/LL.B from the Schulich School of Business at York University and Osgoode Hall Law School in
Toronto.
Terms of New Class of Series 1 Preferred Shares
The Preferred Shares rank as a class senior to the common shares
of the Company (the "Common Shares"), with respect to priority in
the payment of dividends and the distribution of assets on the
dissolution, liquidation or winding-up of the Company. The
Preferred Shares are non-voting other than with respect to any
matters affecting the rights or terms of the Preferred Shares.
The Preferred Shares may be converted at the option of the
holder at any time into Common Shares without additional
consideration on a one-to-one basis. The Preferred Shares will
automatically convert into Common Shares on a one-to-one basis,
without additional consideration, in the event that either (i) the
Common Shares trade at a price above C$15.00 per Common Share on the Toronto Stock
Exchange (the "TSX") or The Nasdaq Stock Market LLC (the "Nasdaq")
based on average daily trading volume of at least 50,000 Common
Shares during any rolling six-month period, or (ii) the holders of
Preferred Shares (the "Preferred Shareholders") representing at
least 75% of the outstanding Preferred Shares (the "Preferred
Majority"), vote or consent to convert all outstanding Preferred
Shares. The conversion ratio is subject to adjustment for diluting
issuances, share splits, reorganizations and other customary
anti-dilution provisions, provided that the conversion ratio will
not be adjusted unless the Company receives all necessary TSX and
shareholder approvals.
One representative of the Preferred Shareholders will be
included in the slate of directors put forward annually (or
otherwise) by management for election as directors of the Company.
Mr. Joseph Freedman has been
appointed to the board of directors as the first Preferred
Shareholder nominee.
The Preferred Shares will not initially be entitled to any
dividends. Following the third anniversary of closing of the
Private Placement, and subject to shareholder approval, any
unconverted Preferred Shares will be entitled to a quarterly
dividend equal to 1.5% (6% annually) of the original issue price,
payable in additional Preferred Shares (the "PIK Preferred
Shares"). If shareholder approval for the PIK Preferred Shares is
not obtained by the third anniversary of closing, the quarterly
dividends will be paid in cash at a rate of 2% (8% annually). No
dividends will be payable on Common Shares while any Preferred
Shares remain issued and outstanding, unless the dividend is
approved by the Preferred Majority and equivalent dividends are
also paid on the Preferred Shares.
The Preferred Shares
issued in connection with the Private
Placement are subject to a Canadian four-month
statutory hold period, in accordance with applicable Canadian
securities legislation.
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful. The securities have not been registered
under the United States Securities Act of 1933, as amended (the
"U.S. Securities Act"), or any U.S. state securities laws, and may
not be offered or sold in the United
States absent registration under the U.S. Securities Act and
all applicable U.S. state securities laws or in compliance with an
applicable exemption therefrom.
Termination of Convertible Debt Facility
In connection with the closing of the Private Placement, the
Company also announces that it has terminated the Company's
C$12 million convertible debt
facility (the "Convertible Debt Facility"). The Company had not
drawn down on the Convertible Debt Facility and has no further
obligations to the lenders under the Convertible Debt Facility.
About Eupraxia Pharmaceuticals Inc.
Eupraxia is a clinical-stage biotechnology company focused on
the development of locally delivered, extended-release products
that have the potential to address therapeutic areas with high
unmet medical need. DiffuSphere™, a proprietary, polymer-based
micro-sphere technology, is designed to facilitate targeted drug
delivery of both existing and novel drugs. The technology is
designed to support extended duration of effect and delivery of
drugs in a hyper-localized fashion, targeting only the tissues that
physicians are wanting to treat. We believe the potential for fewer
adverse events may be achieved through the precision targeting and
the stable and flat delivery of the active ingredient when using
the DiffuSphere™ technology, versus the peaks and troughs seen with
more traditional drug delivery methods. The precision of Eupraxia's
DiffuSphere™ technology platform has the potential to augment and
transform existing FDA-approved drugs to improve their safety,
tolerability, efficacy and duration of effect. The potential uses
in therapeutic areas may go beyond pain and inflammatory
gastrointestinal disease, where Eupraxia currently is developing
advanced treatments, to also be applicable in oncology, infectious
disease and other critical disease areas.
Eupraxia's EP-104GI is currently in a Phase 1b/2a trial, the RESOLVE trial, for the treatment
of eosinophilic esophagitis ("EoE"). EP- 104GI is administered as
an injection into the esophageal wall, providing local delivery of
drug. This is a unique treatment approach for EoE. Eupraxia also
recently completed a Phase 2b
clinical trial (SPRINGBOARD) of EP-104IAR for the treatment of pain
due to knee osteoarthritis. The trial met its primary endpoint and
three of the four secondary endpoints. In addition, Eupraxia is
developing a pipeline of later and earlier-stage long-acting
formulations. Potential pipeline indications include candidates for
other inflammatory joint indications and oncology, each designed to
improve on the activity and tolerability of currently approved
drugs. For further details about Eupraxia, please visit the
Company's website at: www.eupraxiapharma.com.
Notice Regarding Forward-looking Statements and
Information
This news release includes forward-looking statements and
forward-looking information within the meaning of applicable
securities laws. Often, but not always, forward-looking information
can be identified by the use of words such as "plans", "is
expected", "expects", "suggests", "scheduled", "intends",
"contemplates", "anticipates", "believes", "proposes", "potential"
or variations (including negative and grammatical variations) of
such words and phrases, or state that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur
or be achieved. Forward looking statements in this news release
include statements regarding the Company's product candidates,
including expected benefits to patients, potential pipeline
indications, the use of the proceeds of the Private Placement, the
conversion of the Preferred Shares, the payment of dividends on the
Preferred Shares, the issuance of any PIK Preferred Shares and
the receipt of shareholder approval therefor or payment of cash in
lieu thereof, and the appointment of nominees of the Preferred
Shareholders to the board of directors of the Company.
Such statements and information are based on the current
expectations of Eupraxia's management, and are based on
assumptions, including but not limited to: future research and
development plans for the Company proceeding substantially as
currently envisioned; industry growth trends, including with
respect to projected and actual industry sales; the Company's
ability to obtain positive results from the Company's research and
development activities, including clinical trials; and the
Company's ability to protect patents and proprietary rights.
Although Eupraxia's management believes that the assumptions
underlying these statements and information are reasonable, they
may prove to be incorrect. The forward–looking events and
circumstances discussed in this news release may not occur by
certain dates or at all and could differ materially as a result of
known and unknown risk factors and uncertainties affecting
Eupraxia, including, but not limited to: risks and uncertainties
related to the Company's limited operating history; the Company's
novel technology with uncertain market acceptance; if the Company
breaches any of the agreements under which it licenses rights to
its product candidates or technology from third parties, the
Company could lose license rights that are important to its
business; the Company's current license agreement may not provide
an adequate remedy for its breach by the licensor; the Company's
technology may not be successful for its intended use; the
Company's future technology will require regulatory approval, which
is costly and the Company may not be able to obtain it; the Company
may fail to obtain regulatory approvals or only obtain approvals
for limited uses or indications; the Company's clinical trials may
fail to demonstrate adequately the safety and efficacy of its
product candidates at any stage of clinical development; the
Company may be required to suspend or discontinue clinical trials
due to side effects or other safety risks; the Company completely
relies on third parties to provide supplies and inputs required for
its products and services; the Company relies on external contract
research organizations to provide clinical and non-clinical
research services; the Company may not be able to successfully
execute its business strategy; the Company will require additional
financing, which may not be available; any therapeutics the Company
develops will be subject to extensive, lengthy and uncertain
regulatory requirements, which could adversely affect the Company's
ability to obtain regulatory approval in a timely manner, or at
all; the impact of health pandemics or epidemics on the Company's
operations; the Company's restatement of its consolidated financial
statements, which may lead to additional risks and uncertainties,
including loss of investor confidence and negative impacts on the
Company's common share price; and other risks and uncertainties
described in more detail in Eupraxia's public filings on SEDAR+
(sedarplus.ca) and EDGAR (sec.gov). Although Eupraxia has attempted
to identify important factors that could cause actual actions,
events or results to differ materially from those described in
forward-looking statements and information, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. No forward-looking statement or
information can be guaranteed. Except as required by applicable
securities laws, forward-looking statements and information speak
only as of the date on which they are made and Eupraxia undertakes
no obligation to publicly update or revise any forward-looking
statement or information, whether as a result of new information,
future events or otherwise.
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SOURCE Eupraxia Pharmaceuticals Inc.
