Eupraxia Pharmaceuticals Secures C$12 Million Convertible Debt Facility

Eupraxia Pharmaceuticals Inc., a clinical-stage biotechnology company, has secured a new C$12 million convertible debt facility to bolster its cash reserves. The funding will support its operations through the second quarter of 2025. This financial arrangement is backed by Yabema Capital Limited and other existing shareholders, providing a significant source of capital for the company. Eupraxia is recognized for its Diffusphere™ technology, which aims to enhance drug delivery for conditions with unmet medical needs.

The convertible debt facility allows Eupraxia to draw C$12 million within 120 days from the agreement date. The decision to utilize this facility rests with the company and depends on the complete release of a previous debt agreement with Silicon Valley Bank (SVB), initiated on June 21, 2021. The conversion terms enable lenders to convert the debt into common shares at a price of C$4.84375 per share, subject to specific ownership limits.

Dr. James Helliwell, the CEO of Eupraxia, emphasized the importance of this new funding source, noting that it provides critical financial stability as the company advances its clinical programs in eosinophilic esophagitis and osteoarthritis. The final approval for this facility is pending from the Toronto Stock Exchange.

Eupraxia also provided an update on its existing debt facility with Silicon Valley Bank and SVB Innovation Credit Fund. The SVB Facility, which matured on June 21, 2024, involved a total debt of C$10 million, with each SVB Party funding half. Upon maturity, this liability increased to C$12 million. Eupraxia has since settled C$6 million with SVB Innovation Credit Fund and is in discussions with the court-appointed liquidator for the remaining C$6 million. The final settlement is anticipated in the third quarter of 2024, which will reduce Eupraxia’s cash reserves by up to C$12 million to cover the principal and accrued interest.

Eupraxia Pharmaceuticals is dedicated to developing locally delivered, extended-release products aimed at addressing significant medical needs. Its proprietary polymer-based micro-sphere technology, Diffusphere™, is designed to deliver drugs with targeted, long-lasting effects and reduced side effects. This technology can be tailored for various active pharmaceutical ingredients and delivery methods, offering flexible pharmacokinetic profiles.

The company's flagship product, EP-104GI, is currently in a Phase 1b/2a trial known as the RESOLVE trial, targeting eosinophilic esophagitis. Administered through an injection into the esophageal wall, this treatment provides localized drug delivery, distinguishing it from other treatments. Eupraxia has also completed a Phase 2b trial (SPRINGBOARD) for EP-104IAR, aimed at alleviating knee pain caused by osteoarthritis. This trial successfully met its primary endpoint and three secondary endpoints. Eupraxia continues to expand its pipeline with long-acting formulations for other inflammatory joint conditions and oncology, striving to improve the activity and tolerability of existing drugs.

Eupraxia's innovative approach and robust financial strategy underscore its commitment to addressing unmet medical needs through advanced drug delivery systems. The new convertible debt facility and the resolution of the SVB Facility position the company to continue its clinical advancements and operational sustainability into 2025.