Medigard shares take a hit as cash to develop a needle for back pain runs low
Health & Biotech
Health & Biotech
Link copied to
Retractable syringe-maker Medigard sunk nearly 29 per cent on Tuesday after telling investors it needs to raise cash soon.
Its share price dipped to an intra-day low of 2c.
Medigard (ASX:MGZ) said it had “limited cash on hand and a convertible note obligation” and that it will need to raise further capital in the near-term to fund the development of its injectable product to treat back problems.
At the end of the September quarter, the company only had $194,000 in cash and $559,108 worth of convertible notes that are due to be repaid by January 8, 2019.
Medigard also had a further $200,000 in loans that had no repayment date and were accruing interest at a rate of 7.5 per cent.
Executive director Ian Dixon said in a statement to the ASX today that the finalisation of the convertible note debt is currently under discussion.
Medigard is considering all its options to raise extra cash, including a placement and share purchase plan.
“A placement under the existing capacity would enable Medigard to raise around $800,000 — depending upon the then present share price and the actual discount offered,” Mr Dixon said.
He noted that a share purchase plan the company did in December last year was “well supported by shareholders”.
Medigard says it will need at least another $15m to undertake further work on the development of the KT009 injectable product.
The company is also looking for another development project to add to its portfolio.
“Negotiations are presently underway but at an early stage,” Mr Dixon explained.