ASX-listed MGC Pharmaceuticals has struck a significant funding deal with US-based investment group, Mercer Street Global Opportunity Fund, that allows the medicinal marijuana company to draw on a financing facility of up to $15 million to accelerate its clinical trial and research programs.
The Perth-based company says it will get access to the first tranche of $2.25 million once the agreed issue of 2.475 million convertible securities to Mercer with a face value of $1 each has been squared away. The issue that will require a prospectus is expected to take place this month.
In addition, MGC Pharma will issue 9.375 million of its shares to Mercer as consideration for the provision of the funding.
MGC Pharma intends to sink capital into several potential business revenue streams including the production and sales of its ArtemiC natural supplement and phytocannabinoid medicine products into new key markets including Brazil and Britain.
It will also look to complete clinical trials of an ArtemiC spray as an anti-inflammatory treatment for Coronavirus and advance its medicinal cannabis-based epilepsy formula CannEpil clinical trial and Glioblastoma brain cancer research.
Under the financing facility, the company may request additional drawdowns up to a further $12.75 million in total within 18 months of the agreement, via the issue of up to 14,025,000 convertible notes to Mercer, also at $1 each.
This funding agreement in total is significantly larger than what we envisage being required. However, in the near term, it allows us to fast-track commercial activities and multiple preclinical and clinical trials until their completion.
We are also now able to complete the acquisition of Medicinal Cannabis Clinic which provides us access to large new markets and patients in Australia, currently our largest market and revenue generator.
Mercer Street’s management team have played an active role in supporting and investing in many cannabis businesses in North America over the past several years, and have been active investors in ASX-listed companies over a long period. We are excited to have the opportunity to support the team at MGC as they execute on their business strategy.
The financing arrangement with New-York-based Mercer represents a significant shot in the arm for MGC Pharma’s hopes of implementing its business commercialisation initiatives.
It provides vital access to capital to enable MGC Pharma to accelerate the clinical trials for ArtemiC and CannEpil without necessarily issuing more shares.
The facility will also enable MGC to finalise the $1.4 million purchase of Medicinal Cannabis Clinic, and progress to the next phase of the Glioblastoma cancer study among other potential growth pathways.
NB: This article is for general financial markets news purposes only and is not to be taken as an endorsement of, or advertisement for any individual product, medicine, or drug.
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