Full Press Release Details
Eupraxia Pharmaceuticals
Announces that it has Closed a Non-Brokered Private Placement of C$44.5 Million
October 31, 2024 - Eupraxia Pharmaceuticals Inc. ("Eupraxia" or the "Company") (TSX: EPRX) (NASDAQ: EPRX),
a clinical-stage biotechnology company leveraging its proprietary DiffuSphere technology to optimize drug delivery for applications
with significant unmet need, is pleased to announce that it has completed a non-brokered private placement of 8,905,638 Series 1 Preferred
shares of the Company (the "Preferred Shares"), at a price of C$5.00 per Preferred Share for aggregate gross proceeds of C$44,528,190,
by way of a non-brokered private placement (the "Private Placement").
The Company intends to use the
net proceeds from the Private Placement towards the funding of clinical trials for EP104GI, initiating research programs for new candidates
and general corporate and working capital purposes of the Company and its affiliates.
In connection with the closing
of the Private Placement, the Company has appointed Mr. Joseph Freedman to its board of directors. Mr. Freedman is a private equity investor
and corporate director with more than 25 years industry experience including, most recently, 18 years at Brookfield Asset Management,
one of the world's leading private equity and alternative asset management firms. Over his career at Brookfield, Mr. Freedman has
held a number of positions, including Vice Chair of Private Equity, General Counsel and the Partner responsible for M&A transaction
execution, fund formation and fund operations. Prior to joining Brookfield, he was a lawyer in the corporate finance group at a Toronto
law firm, specializing in private equity transactions and public company mergers and acquisitions. Now retired from Brookfield, Mr. Freedman
is a director of several private and public companies and non-profit organizations including the Centre for Aging and Brain Health Innovation
(co-chair), Bridgemarq Real Estate Services (TSX:BRE) and Total Containment Inc. Mr. Freedman holds a joint MBA/LL.B from the Schulich
School of Business at York University and Osgoode Hall Law School in Toronto.
Terms of New Class of
Series 1 Preferred Shares
The Preferred Shares rank as
a class senior to the common shares of the Company (the "Common Shares"), with respect to priority in the payment of dividends
and the distribution of assets on the dissolution, liquidation or winding-up of the Company. The Preferred Shares are non-voting other
than with respect to any matters affecting the rights or terms of the Preferred Shares.
The Preferred Shares may be
converted at the option of the holder at any time into Common Shares without additional consideration on a one-to-one basis. The Preferred
Shares will automatically convert into Common Shares on a one-to-one basis, without additional consideration, in the event that either
(i) the Common Shares trade at a price above C$15.00 per Common Share on the Toronto Stock Exchange (the "TSX") or The Nasdaq
Stock Market LLC (the "Nasdaq") based on average daily trading volume of at least 50,000 Common Shares during any rolling
six-month period, or (ii) the holders of Preferred Shares (the "Preferred Shareholders") representing at least 75% of the
outstanding Preferred Shares (the "Preferred Majority"), vote or consent to convert all outstanding Preferred Shares. The
conversion ratio is subject to adjustment for diluting issuances, share splits, reorganizations and other customary anti-dilution provisions,
provided that the conversion ratio will not be adjusted unless the Company receives all necessary TSX and shareholder approvals.
One representative of the Preferred
Shareholders will be included in the slate of directors put forward annually (or otherwise) by management for election as directors of
the Company. Mr. Joseph Freedman has been appointed to the board of directors as the first Preferred Shareholder nominee.
The Preferred Shares will not
initially be entitled to any dividends. Following the third anniversary of closing of the Private Placement, and subject to shareholder
approval, any unconverted Preferred Shares will be entitled to a quarterly dividend equal to 1.5% (6% annually) of the original issue
price, payable in additional Preferred Shares (the "PIK Preferred Shares"). If shareholder approval for the PIK Preferred
Shares is not obtained by the third anniversary of closing, the quarterly dividends will be paid in cash at a rate of 2% (8% annually).
No dividends will be payable on Common Shares while any Preferred Shares remain issued and outstanding, unless the dividend is approved
by the Preferred Majority and equivalent dividends are also paid on the Preferred Shares.
The Preferred Shares issued
in connection with the Private Placement are subject to a Canadian four-month statutory hold period, in accordance with applicable Canadian
securities legislation.
This news release shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful. The securities have not been registered under the United States Securities Act
of 1933, as amended (the "U.S. Securities Act"), or any U.S. state securities laws, and may not be offered or sold in the United
States absent registration under the U.S. Securities Act and all applicable U.S. state securities laws or in compliance with an applicable
exemption therefrom.
Termination of Convertible
In connection with the closing
of the Private Placement, the Company also announces that it has terminated the Company's C$12 million convertible debt facility
(the "Convertible Debt Facility"). The Company had not drawn down on the Convertible Debt Facility and has no further obligations
to the lenders under the Convertible Debt Facility.
About Eupraxia Pharmaceuticals
Eupraxia is a clinical-stage
biotechnology company focused on the development of locally delivered, extended-release products that have the potential to address therapeutic
areas with high unmet medical need. DiffuSphere , a proprietary, polymer-based micro-sphere technology, is designed to facilitate
targeted drug delivery of both existing and novel drugs. The technology is designed to support extended duration of effect and delivery
of drugs in a hyper-localized fashion, targeting only the tissues that physicians are wanting to treat. We believe the potential for fewer
adverse events may be achieved through the precision targeting and the stable and flat delivery of the active ingredient when using the
DiffuSphere technology, versus the peaks and troughs seen with more traditional drug delivery methods. The precision of Eupraxia's
DiffuSphere technology platform has the potential to augment and transform existing FDA-approved drugs to improve their safety,
tolerability, efficacy and duration of effect. The potential uses in therapeutic areas may go beyond pain and inflammatory gastrointestinal
disease, where Eupraxia currently is developing advanced treatments, to also be applicable in oncology, infectious disease and other critical
Eupraxia's EP-104GI is currently
in a Phase 1b/2a trial, the RESOLVE trial, for the treatment of eosinophilic esophagitis ("EoE"). EP- 104GI is administered
as an injection into the esophageal wall, providing local delivery of drug. This is a unique treatment approach for EoE. Eupraxia also
recently completed a Phase 2b clinical trial (SPRINGBOARD) of EP-104IAR for the treatment of pain due to knee osteoarthritis. The trial
met its primary endpoint and three of the four secondary endpoints. In addition, Eupraxia is developing a pipeline of later and earlier-stage
long-acting formulations. Potential pipeline indications include candidates for other inflammatory joint indications and oncology, each
designed to improve on the activity and tolerability of currently approved drugs. For further details about Eupraxia, please visit the
Company's website at: www.eupraxiapharma.com.
Notice Regarding Forward-looking
Statements and Information
This news release includes
forward-looking statements and forward-looking information within the meaning of applicable securities laws. Often, but not always, forward-looking
information can be identified by the use of words such as "plans", "is expected", "expects", "suggests",
"scheduled", "intends", "contemplates", "anticipates", "believes", "proposes",
"potential" or variations (including negative and grammatical variations) of such words and phrases, or state that certain actions,
events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.
Forward looking statements in this news release include statements regarding the Company's product candidates, including expected benefits
to patients, potential pipeline indications, the use of the proceeds of the Private Placement, the conversion of the Preferred Shares,
the payment of dividends on the Preferred Shares, the issuance of any PIK Preferred Shares and the receipt of shareholder approval therefor
or payment of cash in lieu thereof, and the appointment of nominees of the Preferred Shareholders to the board of directors of the Company.
Such statements and information
are based on the current expectations of Eupraxia's management, and are based on assumptions, including but not limited to: future research
and development plans for the Company proceeding substantially as currently envisioned; industry growth trends, including with respect
to projected and actual industry sales; the Company's ability to obtain positive results from the Company's research and
development activities, including clinical trials; and the Company's ability to protect patents and proprietary rights. Although
Eupraxia's management believes that the assumptions underlying these statements and information are reasonable, they may prove to be
incorrect. The forward-looking events and circumstances discussed in this news release may not occur by certain dates or at all
and could differ materially as a result of known and unknown risk factors and uncertainties affecting Eupraxia, including, but not limited
to: risks and uncertainties related to the Company's limited operating history; the Company's novel technology with uncertain market
acceptance; if the Company breaches any of the agreements under which it licenses rights to its product candidates or technology from