Oasmia adds warrants to sweeten Nasdaq IPO deal as closing date nears

Oasmia Pharmaceutical (STO:OASM) has made another change to its upcoming Nasdaq IPO. The nanotechnology specialist is now planning to hand out one warrant for every two shares it sells in the IPO, positioning it to boost its fundraising haul by more than 60% if investors take up the option to buy stock at the predefined price.

Oasmia CEO Julian Aleksov

Investors can use the warrants to buy stock at 125% of the IPO price for four years after the listing. If Oasmia can bring its pipeline of oncology drugs for humans and animals to market, the warrants could allow investors in the IPO to boost their stake in the company for a knockdown price. Equally, if Oasmia fails to kick on over the next four years--or other forces suppress its stock price--the warrants may expire without investors exercising the option to buy more shares. With the rest of the terms staying unchanged, the warrants are a late incentive to investors considering backing the IPO.

The addition of warrants is the latest in a growing line of tweaks to the IPO. In September, Oasmia raised and then later narrowed its estimated price range, settling on a pitch to sell each share for between $5.75 and $7.75. Throughout the process, the maximum proposed offering has remained constant at $23 million (€20 million). Around one-third of the money is earmarked for clinical trials and other regulatory requirements associated with advancing products to market. General corporate expenditures, including the cost of listing on Nasdaq, will swallow up a similar amount.

Uppsala, Sweden-based Oasmia is advancing assets for both human and animal health. The human health programs are set to account for the bulk of post-IPO investments by the company. A Phase I trial and tolerance study of Docecal--a formulation of docetaxel and Oasmia's XR-17 excipient--is the top priority. Oasmia thinks XR-17, which makes active ingredients water soluble, can reduce infusion times and cut toxicity. Yet, with just $3 million available for the studies of Docecal, Oasmia will need to source additional cash if it is to complete either of the studies.

The current expectation is that the IPO will give Oasmia enough money to get through at least the next 12 months, but the company will need more cash to wrap up a Phase III trial of its reworking of paclitaxel in patients with ovarian cancer. A planned Phase II trial of the formulation in people with metastatic breast cancer is also dependent on Oasmia adding to its coffers after the IPO. At the end of April, Oasmia had $9 million in the bank. The IPO is scheduled to close in October.

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