The Imugene Limited (ASX: IMU) share price has returned from its trading halt and dropped deep into the red.
At the time of writing, the immuno-oncology company's shares are down 15% to 8 cents.
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Why is the Imugene share price sinking?
The Imugene share price is sinking today after the company announced the results of a capital raising.
According to the release, the company has received firm commitments from institutional and sophisticated investors for a $35 million placement of approximately 416.7 million new shares.
Imugene is raising the funds at a price of 8.4 cents per new share, which represents a 10.6% discount to its last close price.
The company notes that the placement received strong interest and support from specialist biotech institutional investors, as well as a number of its own directors and key management personnel.
Imugene won't be stopping there, though. It is now seeking to raise a further $30 million via a share purchase plan (SPP). This will be undertaken at the lower of 8.4 cents per new share and a 2.5% discount to the 5-day VWAP up to and including the closing date of the SPP.
Why is it raising funds?
Imugene revealed that the proceeds will be used for the following:
- To make the upfront payment of US$8 million to Precision Biosciences Inc. (NASDAQ GS: DTIL) in accordance with the terms of the recently announced licence agreement.
- The deferred consideration and milestone payment obligations under the licence agreement, including for the completion of the Phase 1b clinical trial for the licensed Azer-cel Allogeneic CD19 Car-T technology.
- For associated manufacturing, clinical trial, regulatory and working capital costs relating to the licence agreement.
It has been a tough 12 months for shareholders. Since this time last year, the Imugene share price has lost almost 70% of its value.
