Psyence Group Inc (“Psyence Group”) (CSE:PSYG), a clinical-stage life science biotechnology company pioneering the use of nature-derived psilocybin in mental health and wellbeing, today announced that its subsidiary, Psyence Biomedical Ltd (“Pubco”), has entered into a definitive securities purchase agreement (the “Securities Purchase Agreement”) providing for up to US$10 million in funding through the issuance of up to four senior secured convertible notes (the “Notes” and “Note Financing”, respectively) with a US based investment firm (the “Purchaser”).
The Note Financing is expected to provide Pubco approximately USD$2.5 million in funding at closing, which is expected to close immediately prior to or concurrently with the closing of the previously announced business combination with Newcourt Acquisition Corp (Nasdaq: NCAC) (“Newcourt”), a special purpose acquisition company, and Pubco (the “Business Combination”).
“This investment is an incredibly exciting milestone for Psyence, as we make huge strides in our progress towards listing our clinical trial business on Nasdaq. It signals a belief in the work we are doing at Psyence, allowing us to execute our strategy and further our research in palliative care.”
-Dr Neil Maresky, the CEO of Psyence Group
Pursuant to the Securities Purchase Agreement, the Note Financing provides for the issuance of the Notes in the aggregate principal amount of up to USD$12.5 million to the Purchaser.
The Note Financing will be provided in four equal tranches (each a “Tranche”) of USD$3,125,000 of principal in exchange for a total of USD$2,500,000 in aggregate proceeds (i.e. the loan amount) per Tranche. The first Tranche is expected to close immediately prior to or concurrent with the closing of the previously announced Business Combination. The second Tranche funding is conditioned upon the SEC having declared effective a resale registration statement registering for resale the shares of Pubco’s common stock underlying the Note issued to the Purchaser, in connection with the first Tranche, along with certain other conditions, and may be funded, in full or in instalments, over a period of time based on the median of the daily value of the PubCo common shares (“Common Shares”) over a defined period. Funding of the third and fourth Tranches are at the complete discretion of the Purchaser.
The Purchaser will receive a structuring fee equal to an aggregate of 3,000,000 Common Shares of PubCo, of which 1,300,000 Common Shares will be delivered to the Purchaser at the closing of the Business Combination, with the remaining 1,700,000 shares being issuable to the Purchaser upon the exercise of a call option granted to the Purchaser.
The Notes will bear interest at 8% per annum, paid monthly in arrears, and will carry a term of 36 months. Interest may be settled in cash or in Common Shares at the election of PubCo at the conversion price determined under the terms of the Notes.
At any time following one year after the original issue date of the Note, and provided that no event of default is continuing on the applicable prepayment date, PubCo may repay any portion of the outstanding principal amount of the Note upon at least 30 trading days’ written notice by paying an amount equal to 130% of the principal amount of the Note then being prepaid, plus accrued but unpaid interest through the prepayment date.
Completion of the Note Financing is subject to, among other matters, the satisfaction of the conditions negotiated in the Securities Purchase Agreement. Accordingly, there can be no assurance that the Note Financing will be consummated on the terms or timeframe currently contemplated, or at all.