MediPharm Labs Corp. (OTCQX: MEDIF) closed a private placement with an institutional investor for gross proceeds of C$37,822,500. The company said it plans to use the money for general corporate purposes, including building on the launch of its Cannabis 2.0 offerings with new product formats and expanding its product and Active Pharmaceutical Ingredient exports.
“With this strategic capital, MediPharm Labs moves forward confidently with a position of increased financial strength and flexibility to deliver on the longer-term opportunities available to us domestically and internationally that will diversify our revenue and drive long term earnings growth,” said Pat McCutcheon, Chief Executive Officer, MediPharm Labs. “I continue to be excited about the global market opportunity and leveraging our multi-jurisdictional pharmaceutical-quality manufacturing platform in a nascent cannabis market. We are building on our global customer partnerships and market share, providing international distribution expertise, and delivering innovative products and brands. Importantly, we are excited to expand our participation across a wide range of clinical trials that offer potential upside towards the future development of cannabis-based prescription RX products. We look forward to creating value for all shareholders as we build out our capabilities to drive future sustainable growth.”
The money will also strengthen the company’s balance sheet as it navigates the economic recession created by the COVID-19 pandemic. The company said it would file its first-quarter earnings by June 29 and has hinted that the pandemic may have affected the company. It laid off 10% of its employees and instituted a 10% voluntary pay cut.
MediPharm filed an application to list its common shares on the NASDAQ Stock Market (NDAQ) in November 2019, but is still on the OTC exchange according to the press release. The company at the time said it would continue to maintain the listing of its common shares on the Toronto Stock Exchange under the symbol “LABS”.
According to the company statement, $18,911,250 of the Offering is related to the placement of a $20.5 million unsecured convertible note and a warrant to purchase up to 3,601,427 common shares of the company and $18,911,250 of the Offering is currently being held in escrow and is related to the placement of a subscription receipt entitling the holder to receive, upon satisfaction of certain Escrow Release Conditions (as defined below), a further $20.5 million unsecured convertible note and a further warrant to purchase up to 3,601,427 Common Shares.