(Alliance News) - MGC Pharmaceuticals Ltd on Tuesday warned it is at a "critical financial juncture" with its share price having failed to appreciate and fundraising efforts during the year having been underwhelming.
MGC Pharmaceuticals is a pharmaceutical company specialising in the production and development of plant-derived medicines.
Shares fell 48% to 0.055 pence each on Tuesday morning in London.
The company said it had been forced to design a financial and capital restructuring plan to secure long-term financing, saying the plan will reduce its reliance on "constant" capital raising and allow it to complete an 18-month work plan.
MGC called a general meeting of shareholders for October 25 to seek approval of the financial restructuring plan, which includes both a share consolidation and a heavily discounted placement of new shares.
The company proposes to consolidate shares on a 1,000-into-1 basis, reducing its number of shares in issue to 4.4 million from 4.43 billion. It then proposes to issue up to 31.0 million new shares at an 80% discount to the stock's average price on the Australian Stock Exchange. This will give the company a new total of 35.4 million shares. It also will issue 15.5 million options over further new shares, on the basis of 1 option for each 2 new shares.
Managing Director Roby Zomer said: "Regrettably, due to market conditions, we have faced extreme difficulties in raising funds in the UK primarily, and in Australia, despite our continued progress on the research front and our proximity to our [investigational new drug] submissions."
"We understand this restructure will be difficult for many shareholders. 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," Zomer said.
MGC highlighted its progress, such as CimetrA gaining access to the US as an over-the-counter unlicensed drug. It has received orders totalling over USD1 million in sales and more than 50,000 units dispatched to the US market. CimetrA is an anti-inflammatory for the treatment of Covid-19 and Lupus.
MGC also hailed its fully automated facility in Malta and permission from the Slovenian Ministry of Health to undergo scientific research development on the psychedelic compound Psilocybin.
By Tom Budszus, Alliance News reporter
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