Why is the Imugene share price crashing 15% on Friday?

Imugene shares are under pressure on Friday. But why?

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The Imugene Limited (ASX: IMU) share price has returned from its trading halt and dropped deep into the red.

At the time of writing, the immuno-oncology company's shares are down 15% to 8 cents.

Why is the Imugene share price sinking?

The Imugene share price is sinking today after the company announced the results of a capital raising.

According to the release, the company has received firm commitments from institutional and sophisticated investors for a $35 million placement of approximately 416.7 million new shares.

Imugene is raising the funds at a price of 8.4 cents per new share, which represents a 10.6% discount to its last close price.

The company notes that the placement received strong interest and support from specialist biotech institutional investors, as well as a number of its own directors and key management personnel.

Imugene won't be stopping there, though. It is now seeking to raise a further $30 million via a share purchase plan (SPP). This will be undertaken at the lower of 8.4 cents per new share and a 2.5% discount to the 5-day VWAP up to and including the closing date of the SPP.

Why is it raising funds?

Imugene revealed that the proceeds will be used for the following:

  • To make the upfront payment of US$8 million to Precision Biosciences Inc. (NASDAQ GS: DTIL) in accordance with the terms of the recently announced licence agreement.
  • The deferred consideration and milestone payment obligations under the licence agreement, including for the completion of the Phase 1b clinical trial for the licensed Azer-cel Allogeneic CD19 Car-T technology.
  • For associated manufacturing, clinical trial, regulatory and working capital costs relating to the licence agreement.

It has been a tough 12 months for shareholders. Since this time last year, the Imugene share price has lost almost 70% of its value.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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