MGC Pharmaceuticals has entered into a financing facility with Mercer Street to provide the cannabis biotech with up to A$15M in funding.
MGC Pharmaceuticals (ASX:MXC) today announced that the company has entered into a convertible securities agreement with the U.S. based investment group Mercer Street Global Opportunity Fund to provide MGC Pharmaceuticals with a total of $15 million in funding.
MGC will issue 2,475,000 convertible notes valued at $1 each to Mercer Street, and in exchange, the company will receive a first tranche of A$2.25 million, with conditions for a further exchange of 14 million convertible notes for an additional A$12.75 million tranche.
MGC Pharma plans to utilize this financing facility and the potential A$15M in capital it may provide in order to accelerate its ongoing clinical trials, particularly for ArtemiC and CannEpil, and in order to progress the company's commercialization strategy.
According to the recent announcement, MGC now expects to be funded through to its cashflow break-even target of H1 calendar 2021.
Moreover, the funding will allow MGC to increase the sales of its phytocannabinoid medicines, including the company's low-cost Mercury Pharma product line into new markets, moving MGC closer toward its target of issuing 5,000 prescriptions per month in H1 2021. Should that goal be met, the company believes it will achieve operating cash flow break-even status.
On the financing facility, MGC Pharma's Co-founder and Managing Director, Roby Zomer, commented: "2020 has been an important year for our operational and commercial progress and we have now reached an inflection point in our growth. 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.
[MGC Pharma] 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. MGC Pharma Co-founder and Managing Director, Roby Zomer
Jonathan Juchno, Managing Partner, Mercer Street, also spoke on the agreement: "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 MXC as they execute on their business strategy."
To learn more about MGC Pharma, visit their company HQ here.
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