Edesa Biotech secures $15 million for clinical program

TORONTO - Edesa Biotech, Inc. (NASDAQ:EDSA), a clinical-stage biopharmaceutical company, has announced the completion of a private placement funding round on February 12, 2025, raising approximately $15 million in gross proceeds. According to InvestingPro data, the company maintains a strong balance sheet with more cash than debt, making this capital raise strategic for its growth plans. The capital infusion is earmarked to advance the company’s CXCL10 monoclonal antibody program through the end of fiscal 2026.

The private placement included 834 Series B-1 convertible preferred shares and 3,468,746 common shares, priced at $10,000 and $1.92 each, respectively. Notably, company insiders, including officers and directors, contributed roughly $1.1 million to the offering. The shares were sold directly to investors, bypassing the need for placement agents or brokers. With the stock currently trading at $1.86, InvestingPro analysis suggests the company is currently undervalued, though investors should note the stock has declined nearly 59% over the past six months.

Velan Capital led the financing round, with participation from new investors such as Nantahala Capital, Rubric Capital Management LP, Stonepine Capital Management, Broadfin Holdings LLC, and existing shareholders. In conjunction with the investment, David Liu of Velan Capital has been appointed to Edesa’s Board of Directors.

The Series B-1 Preferred Shares are convertible into common shares at a price of $1.92, with a beneficial ownership limitation set at 4.99% or 9.99% of the outstanding common shares upon conversion, subject to certain conditions.

Edesa intends to use the net proceeds from this offering to fund a Phase 2 clinical study of its EB06, an anti-CXCL10 monoclonal antibody, for the treatment of nonsegmental vitiligo, as well as for general corporate purposes and working capital. Analyst price targets range from $20 to $21, reflecting significant upside potential. Get access to more detailed financial insights and 6 additional ProTips with InvestingPro.

The securities sold in this private placement have not been registered under the Securities Act of 1933 and were offered to "accredited investors" as defined under Canadian regulations. Additionally, Edesa has committed to filing a registration statement with the Securities and Exchange Commission for the resale of the common shares and Conversion Shares within 30 days post-closing.

Edesa’s current clinical pipeline focuses on therapies for inflammatory and immune-related diseases, including a potential treatment for Acute Respiratory Distress Syndrome (ARDS) and an investigational new drug application for a future Phase 2 study in pulmonary fibrosis patients. While the company maintains a "Fair" overall financial health score according to InvestingPro metrics, analysts do not anticipate profitability this year, with projected EPS at -$0.85.

This funding news is based on a press release statement from Edesa Biotech, Inc.

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