Alterity (ASX:ATH) share price lower on completed placement

The Alterity Therapeutics Ltd (ASX: ATH) share price has been falling today following the release of a completed capital raise announcement. In early morning trade, the biotech’s shares were pushing higher but have since pulled back. At the time of writing, the Alterity share price is down 2% to 4.9 cents.

Let’s take a further look at Alterity and what it announced.

What does Alterity do?

Alterity is an Australian biotech company that focuses on commercialising research into neurodegenerative disorders. These include Parkinsonian movement disorders, Alzheimer’s disease, Huntington disease and others.

The company’s lead candidate, ATH434, is currently in development. It aims to block the aggregation of pathological proteins that cause brain degeneration. Current remedies include medications and lifestyle choices to the manage symptoms, but there is no treatment to cure the disease.

Completed placement

Alterity advised it has received binding commitment for a capital raising of $35 million. The placement will be via two tranches to top tier institutional investors in Australia and North America. In addition, new institutional and sophisticated investors from Australia, the United Kingdom and North America will take part.

The fully subscribed capital raise was conducted at an offer price of 3.7 cents. This represented a 25.7% discount on the 30-day volume weighted average price prior to the trading halt. The company said that for every share allocated in tranche two of the placement, one option will be issued.

The option will have an exercise price of 7 cents and an expiry date of three years post allotment.

The first tranche is expected to raise approximately $10 million under the current placement capacity. The second tranche is valued at $25 million, subject to shareholder approval planned on 18 November at the company’s AGM.

The new shares to be issued will rank equally with the existing fully paid Alterity ordinary shares.

Where are the funds going to?

The proceeds of the placement will used to progress Alterity’s clinical development program for ATH434. This will include a natural history study and a phase II trial targeting multiple system atrophy patients.

Furthermore, ongoing research and discovery, as well as working capital, will be allocated a portion of these funds.

Management commentary

Alterity Chair and CEO, Mr Geoffrey Kempler commented on positive feedback to fund ATH434. He said:

We are thrilled with the response of global investors in supporting Alterity to advance our lead compound ATH434 for the treatment of MSA to later stage patient trials.

We believe that our science is unique, validated, and is capturing the attention of physicians and researchers for its potential to have a positive impact on the lives of many people suffering from Parkinsonian diseases which currently have no cure.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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