MGC Pharmaceuticals Ltd (LSE:MXC, OTC:MGCLF, ASX:MXC) said directors have been forced to propose a financial and capital restructuring plan to secure long-term financing due to the extreme difficulties in raising funds on the stock market this year.
The plan, including an equity placing to be confirmated at a shareholder meeting next month, will “provide the company with the necessary runway required to achieve key inflection milestones to help restore value in MGC Pharma” and “reduce our reliance on constant capital raising and allow us to complete an 18-month work plan”, said managing director Roby Zomer in a letter to investors.
Alongside the share placement, a 1,000-for-one consolidation of shares, options and performance rights is proposed.
Zomer said the restructuring “will bring greater stability and re-position the company to be more attractive for institutional support”.
It will also enable the management team to focus on delivering key milestones, he said, such as submitting its first investigational new drug (IND) application to the US medical regulator, increasing sales figures and completing clinical programmes.
“We understand this restructure will be difficult for many shareholders,” Zomer said. “However, in light of dire alternatives, the board and management believe this is a necessary action to help to sustain the company's future and financial security beyond the short to immediate term.”
MGC last month reported findings from the pre-clinical chronic toxicology evaluation of its CimetrA drug as it targets the first quarter of 2024 for its IND submission to the US Food and Drug Administration.