aibioEdesa Biotech closes $15.0 million private placement led by Velan Capital
Tickers EDSA
Edesa sold 834 Series B-1 preferred shares at $10,000 each and 3,468,746 common shares at $1.92. A Velan Capital analyst joined its board.
Key facts
- Company
- Edesa Biotech, Inc. (NASDAQ: EDSA)
- News type
- Financings
- Primary source
- Edesa Biotech, Inc. 8-K (2025-02-13)
The placement and who bought
Edesa Biotech, Inc. (Nasdaq: EDSA) said on February 13, 2025 that it sold, in a private placement, 834 newly designated Series B-1 convertible preferred shares and 3,468,746 common shares. The company says the deal was priced at-the-market under Nasdaq rules. The preferred shares sold at $10,000 each and the common shares at $1.92 each. The offering closed on February 12, 2025, with gross proceeds of approximately $15.0 million before offering-related expenses. Velan Capital led the placement. New investors were Nantahala Capital, Rubric Capital Management LP, Stonepine Capital Management and Broadfin Holdings LLC, and existing shareholders and insiders also bought. Officers and directors of the company bought approximately $1.1 million of the securities. The shares were offered directly to investors without a placement agent, underwriter, broker or dealer, so the release names no bank or advisor on the deal. The company's release also names no counsel. The one outside firm tied to the deal is Velan itself, which is an investor, not an adviser.
The preferred and its limits
Each Series B-1 preferred share has a stated value of $10,000 and converts into common shares by dividing that value by the conversion price of $1.92. Conversions are capped so that an individual holder owns no more than 4.99% of the outstanding common shares, or 9.99% at the investor's option. The cap limits how much of the converted stock a holder can take at once, but it does not limit the total dilution once the preferred is converted over time. The release says that the common shares and the conversion shares are subject to a resale registration statement the company agreed to file with the Securities and Exchange Commission within 30 days of closing. That filing will determine when holders can sell the stock into the market.
Board seat
David Liu, a Senior Analyst at Velan Capital, was appointed to Edesa's board effective immediately on closing, under an Investor Rights Agreement. The release describes him as a Velan analyst, not as an independent director, and it states that the board appointment was part of the financing.
What the money is for
Edesa says it expects to use the net proceeds to advance EB06, its CXCL10 monoclonal antibody, into a Phase 2 clinical study in subjects with nonsegmental vitiligo, and for working capital and general corporate purposes. The release says the capital raise funds the CXCL10 antibody program through the end of fiscal 2026. The company's annual report describes EB06 as having demonstrated a favorable safety and tolerability profile to date. It also says Health Canada has approved a Phase 2 proof of concept study in moderate-to-severe nonsegmental vitiligo, and that the company is in discussions with the FDA for the same study. That is the company's own description of an early program, and the report does not describe efficacy results from the trial.
Other programs and the risks
The annual report describes Edesa's clinical pipeline as focused on Medical Dermatology and Respiratory. Its medical dermatology assets include EB01, a 1.0% daniluromer cream that the company calls a Phase 3-ready asset for chronic allergic contact dermatitis, and the company says that asset is at the partnering stage. Its most advanced respiratory candidate, EB05 or paridiprubart, is being evaluated in a U.S. government-funded platform study in hospitalized adults with acute respiratory distress syndrome. The company also plans an investigational new drug application in the United States for a future Phase 2 study of EB07, paridiprubart, in pulmonary fibrosis. The annual report says the company prefers to seek partners for Phase 3 testing and scale-up, because pivotal studies require high capital. The release's risk list includes whether the company's product candidates will be effective against the diseases tested, whether it can keep its license agreements with third parties, and whether it can obtain regulatory approval. For a company funding a clinical program through fiscal 2026 with a $15.0 million placement, those are the risks the release names itself.