Pacific Edge, the bladder test investor whose share price has more than doubled in the past week, wants to raise as much as $20.5 million from shareholders to fund its growing push into the US, having grabbed a beach-head with two healthcare network providers in the world's biggest economy.
The Dunedin-based company will offer a 2 for 15 renounceable rights issue to investors at 55 cents apiece, a 16 per cent discount to the volume-weighted average over the past month, and 57 per cent below the recent trading price of $1.29.
The capital raising is expected to ease short- to medium-term risks around Pacific Edge's liquidity, and as at April 1, it held $10.7 million in cash and equivalent assets.
Of the funds raised, some $10.2 million will go to building the company's sales team in the US over the next three years, $6.6 million will be spend on operational expenditure at the US and New Zealand commercial labs, and $3.7 million will go towards new product development, launch and roll-out.
See the company's announcement released to the NZX today.
Chief executive David Darling told BusinessDesk the company aims to beef up its US sales team from four to 20 as it targets large commercial players, where it sees greater scale in rolling out its CXbladder on its mission to reach annual revenue of $100 million within the next five years.
"It's a very doable target, and could come sooner," Darling said. "We're looking to bring the company to a place where it's cashflow positive as soon as possible" though it's too early to determine when it will reach profitability, he said.
The capital raising comes after Pacific Edge announced two agreements with US healthcare network providers, giving it access to sell its CXbladder test to 44 million Americans, and announced its first commercial sale to US clinicians.
That's seen the share price climb as high as a $1.75, a record, and Darling said there had been quite a lot of interest from Asian and US investors after the company received coverage in the Wall Street Journal.
The offer was "carefully priced for our shareholders to make sure they get upside," Darling said.
Any rights not taken up will be sold into a back-end shortfall bookbuild to eligible investors on November 29 and shareholders will be able to participate in an oversubscription facility of up to 100 percent, though Darling said the company isn't planning on raising extra funds.
Trading in the rights begins on November 5 and closes on November 21, with a November 7 record date for eligibility. The offer closes on November 27, and allotment for shares under entitlement is scheduled for December 4.
First NZ Capital was appointed organising participant for the capital raising.
Pacific Edge was formed in 2001 to commercialise intellectual property acquired from the University of Otago, listing on the stock exchange two years later in a public offer of 12 million partly paid shares at 25 cents apiece.
The company has published research showing the non-invasive Cxbladder procedure is more successful than current, more costly invasive methods such as cystoscopy.
Commercialisation of the test comes after some $28 million of capital investment on Cxbladder and a range of other diagnostic tests to be rolled out in the future.