Pharmaxis secures $4.4 million in placement to support ongoing myelofibrosis and skin scarring clinical studies

Pharmaxis Ltd (ASX:PXS) (FRA:UUD) has received commitments from sophisticated and institutional investors to subscribe for 54.6 million fully paid ordinary shares at A$0.08 per share to raise around A$4.4 million.

New shareholder Karst Peak Capital Limited has invested A$3.2 million for an 8.9% holding in the company and existing shareholder BVF Partners LP invested A$800,000 to maintain its holding at 19.5%.

Funds raised will be used to strengthen the balance sheet as the company conducts a phase 1/2 study in myelofibrosis with its lead drug PXS-5505 (which is already recruiting) and a phase 1c study in patients with problematic skin scarring with its topical drug PXS-6302.

The company will have a A$20 million pro-forma cash balance (as of March 31, 2021) post raising.

“Major shareholder recognises pipeline potential”

New major shareholder Karst Peak is based in Hong Kong and Sydney focusing on equity investments in listed companies in the consumer, healthcare, and technology sectors in Asia and Australasia.

Pharmaxis chief executive officer Gary Phillips said: “We are delighted to welcome Karst Peak as a major shareholder as we commence clinical studies that will deliver results that will have significant value to both patients and shareholders.

“This recognition of the potential in our pipeline from an institutional fund that is renowned for its extensive due diligence prior to investing is very encouraging at a time when we are focusing our resources on clinical trials and looking to deliver non-dilutive cash and cost savings from other parts of our business.”

In addition, existing shareholder BVF Partners LP has committed to invest a further A$800,000 to maintain its shareholding in the company to 19.5%.  

Russian deal boosts financial footing

Further strengthening the balance sheet, Pharmaxis also announced today the sale of the distribution rights in Russia for its cystic fibrosis product Bronchitol.

Regional pharma specialty company GEN İlaç ve Sağlık Ürünleri San. ve Tic. A.Ş. (GEN) has purchased the rights for A$2 million – effective May 1, 2021.

Phillips said the company was delighted that key functions would now be handled by GEN, a trusted business partner in other territories for more than seven years.  

“Pharmaxis steered Bronchitol to approval as the first orphan drug approved in Russia following a change in legislation, listing on the Essential Drugs List and subsequently established a fast-growing business that brought a new drug to cystic fibrosis patients in Russia.  

“We have had a long and productive collaboration with GEN who have been our distributors in the Turkish market for many years.  

“Extending this relationship to encompass Russia and other related territories at this time will ensure that Bronchitol will be well supported by an experienced partner with a leading position in cystic fibrosis care.”

“Cost savings strengthen balance sheet”

Seventy per cent of the distributor appointment fee is now payable to Pharmaxis with the remaining 30 per cent due in 12 months.

In addition to the sale price, the company has secured ongoing annual savings of A$1 million in marketing and regulatory expenses. 

Phillips said: “The upfront payments and the annual cost savings realised by the company along with today’s placement strengthen our balance sheet as we commence clinical proof of concept studies in myelofibrosis and skin scarring.  

“Further initiatives currently underway to generate non-dilutive cash and reduce operating expenses will be announced as they are completed.” 

Pharmaxis will continue to manufacture and export Bronchitol to Russia from its factory in Sydney that also supplies the US, European and Australian markets.

Story by ProactiveInvestors