Bionomics focuses on cash, cancels $4m offer citing ‘insufficient demand’

A visibly upset Bionomics chief executive Dr Deborah Rathjen left straight after formal proceedings of the annual meeting in Adelaide on Wednesday, forgoing the traditional chance to mingle with shareholders.

Valerina Changarathil

@valerinac

3 min read

November 14, 2018 - 2:00PM

She also became emotional during her address to shareholders where she informed them of her resolve to continue to hold her 2.5 million-share stake in the company as she watched its progress from the sidelines.

She will leave the company at the end of January – after overseeing its growth since 2000.

“The pipeline is still robust despite the setback for BNC210 in the Post Traumatic Stress Disorder. And, of course, we are looking forward to phase two clinical trial data in our agitation trial in Q1,” she said. “Our outstanding partnership with Merck continues very strongly and, of course, this is the jewel in the crown of Bionomics.”

She justified the company’s decision to target PTSD for BNC210 and go down the path of trials before bringing on a major pharma partner – as suggested by long-term shareholders and analysts in the past months.

A strategic review of the business is being undertaken by Greenhill & Co, following the results, released in October, which pushed Bionomics’ share price to a 12-year low.

An ongoing trial of BNC210 in hospitalised, elderly patients suffering from agitation will continue until the first quarter of next year, but all other work on the drug would be stopped until that time.

“With BNC210 – the facts remain the same. BNC210 has demonstrated many advantages over currently marketed drugs for the treatment of anxiety, depression and agitation.”

Executive chairman Dr Errol De Souza told The Advertiser the company would not be looking for a new chief executive until its strategic review was complete.

“That time frame is coincident with two key inflection points, which is the outcome of agitation trial (with BNC210) and information from Merck (known as MSD outside the US and Canada), which is a major asset in terms of progression.”

He also said the exit of Dr Rathjen, pictured, followed “really a dialogue we had together” following the disappointing results of the PTSD trial.

Bionomics also on Wednesday cancelled its planned $4 million institutional shares offering citing insufficient demand and difficult market conditions, but kept its placement deal with a major shareholder and a share offer for retail investors.

The institutional offer flagged on November 9 when the company, which has its annual meeting in Adelaide on Wednesday, also announced leadership changes and a strategic review of the business.

In a note to investors on Wednesday, Bionomics said shareholder BVF now holds 19.9 per cent of the company on a post-placement basis — doubling its previous holding.

The total placement to BVF will be more than 60 million new shares at 16.4c, raising close to $9.9 million.

A separate offer for other institutional investors of up to 5 per cent of Bionomics’ issued capital was being managed through Shaw Stockbroking and Bell Potter at the same price as BVF.

“Based on feedback from the brokers of insufficient demand from institutions along with difficult market conditions over the last two days, the board has made the decision not to proceed with the offer,” newly appointed executive chairman Dr Errol De Souza said.

“Therefore, the placement component of the recapitalisation announced on 9 November 2018 will now consist solely of shares placed to BVF”.

Bionomics intends to proceed with the Share Purchase Plan for retail investors at 15.5c per share with final pricing and terms to be announced on November 22.

Assuming the SPP is fully subscribed, Bionomics will have pro forma $27.1 million in cash and cash equivalents at the end of October 31.

The cash increase would provide the company with “enhanced flexibility to reduce or eliminate external debt in future”.

Cash burn was also being substantially reduced through a monthly cost saving of $150,000 in personnel reductions and another $100,000 in other expenses, and another $2 million by ceasing R&D activities.

Net cash runway was now extended to mid June 2020.

“The board is confident that with the proceeds of the financing, it is now in a position to deal with all foreseeable outcomes from near-term inflection points and to develop and implement a strategy to maximise value for all our shareholders in the future from a more stable financial base,” Dr De Souza said.

Bionomics shares closed 16 per cent lower on Wednesday at 13c.