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Why the Botanix share price is sagging today

The Botanix Pharmaceuticals Ltd (ASX: BOT) share price is sagging today after the company made two announcements to the ASX during a two-day trading halt. On Monday trading, BOT shares closed at 26 cents per share, but re-opened this morning at the 24 cents per share level – a fall of 7.69%.

What has Botanix announced?

Quarterly update

In a quarterly update, Botanix announced both positive results of clinical trials of various cannabidiol (CBD) products as well as higher than expected cash outflows. Here are some of the highlights from the update:

  • Botanix reports that interim data from testing the BTX 1308 product has “established the mechanism of action of cannabidiol in skin disease and confirms BTX 1308 has significant anti-inflammatory activity”.
  • The company has claimed “ground-breaking data” from its BTX 1801 product study has highlighted the antimicrobial nature of CBD and demonstrated that “antibiotic-resistant bacteria do not develop resistance to CBD”.
  • Botanix’s BTX 1503 Phase 2 acne and BTX 1204 Phase 2 atopic dermatitis studies remain on track for completion.

As for cash flow, the company stated:

During the quarter, Botanix had net cash outflows of A$4.6m with $4.3m invested in R&D activities, primarily to progress the two Phase 2 clinical studies (BTX 1503 and BTX 1204). At the end of the quarter, Botanix held $4.7m in cash.  Forecast cash outflows for R&D activities is estimated to be $5.7m for the upcoming quarter.

Funding announcement

In a separate release, Botanix also confirmed that it has received commitments for a $40 million equity funding placement. Here’s what the company has said:

Botanix has received firm commitments for A$40m at an offer price of A$0.21 per fully paid ordinary share, underpinned by strong support from US institutional investors including specialist US-based biotech investment funds and leading institutional investors… Upon completion of the Placement, Botanix will issue 190,476,191 shares, at an offer price of A$0.21. The offer price represents a 16.7% discount to the 15-day VWAP (average) of A$0.252 to trading close on 29 July 2019.

The company stated it “is now fully-funded to progress the development of its antimicrobial program into clinical studies and also undertake supportive studies for other products.”

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Motley Fool contributor Sebastian Bowen 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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