Following the company’s recent announcement of a partnership agreement with Molteni Farmaceutici, OncoZenge has now disclosed a pivotal investment agreement with the Chinese pharmaceutical company Sichuan Yangtian Bio-Pharmaceutical. Through the financing agreement, the company secures approximately SEK30.2m (gross) to fund its upcoming European phase III clinical trials for BupiZenge, its novel treatment for cancer-related pain (oral mucositis). The agreement involves Yangtian subscribing to up to 4.67m new shares in OncoZenge at a price of SEK6.47 per share, corresponding to a dilution effect of some 28.5%. This subscription price reflects a discount of approximately 7.6% to yesterday’s closing price, but a 40% premium over the volume-weighted average price (VWAP) of OncoZenge’s shares during the previous 20 trading days, demonstrating Yangtian’s strong confidence in the company and its prospects.

Furthermore, the investment will be carried out in four stages throughout 2025, with each tranche tied to specific milestones related to the phase III trial process, including planning, regulatory submissions, and European trial approval. The four share issues correspond to 10%, 10%, 30% and 50%, respectively, of the investment, are estimated to be directed to the investor throughout Q1 to Q3 of 2025. Once all stages are completed, Yangtian will hold a 28.5% ownership stake in OncoZenge, making it a key strategic shareholder.

The investment is subject to several conditions, including approval from OncoZenge shareholders to authorize new share issues, amend the company’s articles of association, and meet Chinese regulatory requirements for outbound investments. To address these steps, an extraordinary general meeting has been scheduled for March 3, 2025.

As we have previously explained, securing funding was a critical step for the company. We are encouraged to see that OncoZenge has managed to do so in a favourable manner, on terms that are beneficial for the company and its shareholders, mitigating shareholder dilution and exposure to market volatility. Primarily, the funding will finance the phase III clinical trials for BupiZenge (67%), covering essential activities such as clinical site fees, regulatory applications, appointment of CDMO and CRO, and trial execution. A portion of the funds (33%) will also support OncoZenge’s broader operations, including global business development, intellectual property filings, and preparations for entry into the US market. We argue that these activities will contribute towards the anticipated market launch of BupiZenge and, ultimately, towards increased shareholder value.

Furthermore, we believe that this agreement marks a significant milestone for OncoZenge, not only by securing the necessary resources to advance BupiZenge toward regulatory approval but also by solidifying a strategic partnership with Yangtian Pharma. The collaboration with Yangtian brings both financial support and extensive pharmaceutical expertise, particularly in the Asian markets, which could play a key role in the future commercialization of BupiZenge.

In our latest Research Update, we assumed that the company would carry out a rights issue in the region of SEK25m with an estimated subscription price of SEK3 per share (representing a discount rate of 25% at the time). However, due to a favourable share price development and advantageous agreement terms, this investment agreement represents a far more beneficial capital raise than we had previously modeled for.