SciSparc Ltd. Announces $20 Million Standby Equity Purchase Agreement
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The standby equity purchase agreement (SEPA) between SciSparc Ltd. and YA II PN, Ltd. represents a strategic financing move that can provide SciSparc with a flexible funding option over the next three years. Such agreements are typically used by companies to secure capital without the immediate dilution of shares that occurs in traditional equity offerings. The commitment of up to $20 million is substantial for a clinical-stage pharmaceutical company, potentially bolstering the company's financial position as it continues to develop treatments for central nervous system disorders.
From a financial perspective, the 3% discount to the weighted average price offers an attractive entry point for YA, while also providing SciSparc with capital at a relatively low cost of financing compared to other methods such as debt. However, investors should be aware that the agreement includes a beneficial ownership cap, which limits the potential dilution for existing shareholders. This cap serves to prevent YA from acquiring a controlling interest in the company, thereby protecting the interests of current investors.
It's important to note that the proceeds are intended for working capital and general corporate purposes, which suggests that the company is looking to strengthen its operational capabilities and possibly fund ongoing research and development. The flexibility of the agreement allows SciSparc to control the timing of the share sales, which can be advantageous in managing cash flows and funding needs as they arise.
The stipulation that the securities have not been registered under the Securities Act of 1933, as amended and the mention of a future registration statement with the SEC highlights the regulatory compliance aspect of this financing strategy. The use of a SEPA requires careful navigation of securities laws, including the registration or exemption requirements for the sale of the shares. This is a critical legal step to ensure that all transactions are conducted in accordance with federal securities regulations, thereby mitigating legal risks associated with the offering.
Furthermore, the fact that the press release explicitly states that it does not constitute an offer to sell or a solicitation of an offer to buy is a standard legal disclaimer aimed at avoiding the premature offer of securities prior to the necessary regulatory approvals. This protects the company from potential legal consequences of violating securities laws and underscores the importance of adhering to the proper registration or qualification under the securities laws of any jurisdiction in which the shares may be sold.
The pharmaceutical industry, particularly the segment focusing on the central nervous system disorders, is highly competitive and capital-intensive. The announcement of the SEPA could be interpreted positively by the market as a vote of confidence in SciSparc's potential from an investment fund managed by Yorkville Advisors Global, LP. The availability of capital through this agreement may provide SciSparc with the necessary resources to advance its clinical pipeline, which in turn could lead to significant milestones that would be positively received by the market.
However, the impact on the stock price will depend on investor perception of the agreement's terms and the company's ability to utilize the capital effectively. The market will closely monitor how the company deploys the funds, looking for indications of progress in drug development and any strategic partnerships or acquisitions that could enhance SciSparc's market position. The long-term effect on the stock will largely hinge on the successful advancement of the company's therapeutic candidates and the realization of its corporate goals.
TEL AVIV, Israel, Jan. 24, 2024 (GLOBE NEWSWIRE) -- SciSparc Ltd. (Nasdaq: SPRC) (“Company” or “SciSparc”), a specialty clinical-stage pharmaceutical company focusing on the development of therapies to treat disorders and rare diseases of the central nervous system, today announced that it has entered into a standby equity purchase agreement (the “SEPA”) with YA II PN, Ltd. (“YA”), a fund managed by Yorkville Advisors Global, LP. Under the terms of SEPA, YA is committed to purchase up to
The Company will have the right in its sole discretion to sell shares to YA from time to time upon the issuance of an advance notice, which has no right to require the Company to sell any shares, following the effectiveness of a registration statement with the Securities and Exchange Commission registering the ordinary shares issuable pursuant to the SEPA and other customary closing conditions.
The Company intends to use the proceeds from the potential offering of the ordinary shares pursuant to the SEPA for working capital and other general corporate purposes.
The securities described herein have not been registered under the Securities Act of 1933, as amended, and may not be sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or other jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
About SciSparc Ltd. (Nasdaq: SPRC):
SciSparc Ltd. is a specialty clinical-stage pharmaceutical company led by an experienced team of senior executives and scientists. SciSparc’s focus is on creating and enhancing a portfolio of technologies and assets based on cannabinoid pharmaceuticals. With this focus, the Company is currently engaged in the following drug development programs based on THC and/or non-psychoactive CBD: SCI-110 for the treatment of Tourette Syndrome, for the treatment of Alzheimer's disease and agitation; SCI-160 for the treatment of pain; and SCI-210 for the treatment of ASD and status epilepticus. The Company also owns a controlling interest in a subsidiary whose business focuses on the sale of hemp seeds oil-based products on Amazon Marketplace.
Forward-Looking Statements:
This press release contains express or implied forward-looking statements pursuant to U.S. Federal securities laws. For example, SciSparc is using forward-looking statements when it discusses the potential sale of securities pursuant to the SEPA and the proposed use of proceeds from the SEPA. Because such statements deal with future events and are based on SciSparc's current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of SciSparc could differ materially from those described in or implied by the statements in this press release. The forward-looking statements contained or implied in this press release are subject to other risks and uncertainties, including those discussed under the heading "Risk Factors" in SciSparc's Annual Report on Form 20-F filed with the SEC on May 1, 2023, and in subsequent filings with the U.S. Securities and Exchange Commission. Except as otherwise required by law, SciSparc disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date they were made, whether as a result of new information, future events or circumstances or otherwise.
Investor Contact:
IR@scisparc.com
Tel: +972-3-6167055
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