The following statement is from Novogen’s (NASDAQ: NVGN) CEO Blog:
An additional $2.5M dollars in the bank gives us the ability to push on with all speed with the pre-clinical phase of the CS-6 program.
For those wondering why bother raising so little when drug development costs so much, there is a simple answer. The first part goes to confidence …. confidence that we can deliver on some key milestones over the course of the next 6 months. And that feeds into the second part ….. that we want to raise the minimum amount of money at current prices to avoid unnecessary shareholder dilution.
One of the resolutions being put to the shareholder vote on April 19 is permission to raise up to $10m on the terms outlined in the resolution. On top of which is the automatic refreshing at the time of the General Meeting of our 15% headroom capacity to issue stock without shareholder approval. So we are well placed over the course of this year to raise any further capital should it prove necessary.
The decision to go to the market now and not wait until after the General Meeting was forced on us by circumstances, which to a large extent are the result of being successful. With the assistance of Patersons Securities we conducted a relatively modest roadshow in Sydney and Melbourne, more by way of a sounding exercise ahead of gaining shareholder approval to issue stock up to the value of $10m after April 19. That stock was to be priced on the basis of a 5-day VWAP, which for the uninitiated is the Volume Weighted Average Price over a 5-day period. As a result of the extraordinarily high daily turnover in our stock and substantial intra-day price variations going back to our Feb 18 announcement concerning CS-6 and cancer stem cells, the current VWAP was at a substantial premium to the share price at the time of the roadshow, making any offer relatively unattractive to investors. Without any certainty that that volatility was going to subside in the short-term, we decided to make the offer on the basis of the 15% headroom available to directors to be achieved post-April 19. That gave us the basis to price the stock without reference to the VWAP.
That is why we have sought the money when we have, and why we only raised $2.5, because we had to fit under the 15% headroom allowance.
We have also announced an intention to conduct a Share Purchase Plan, the details of which currently are being worked out, and this will be put to all Australian and New Zealand shareholders in the near future. SPPs give shareholders the opportunity to participate in a capital raising at a discount to market and without brokerage fees.
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