How's the Capital Raise Going to Work?

CHM is burning around $5m per quarter. Even with the recent R&D tax rebate, it has less than 2 quarters of funding remaining.

The L1 facility requires that CHM issues shares at a discount to the VWAP of 5 of the previous 30 trading days (selected by L1), so whatever the exact price, its looking like it will be under 7cps.

Current shares on issue: 437m

Raising $30m at 7cps = 429m shares. Plus L1 were already issued 5m shares back in June last year when the funding arrangement was announced. This would leave L1 with approx 50% of the company. I don't think any shareholder can take such a large position without the approval of other shareholders, so not sure how this can work?

The L1 funding agreement announcement did note: "Equity placement facility of up to a total of A$30 million over 24 months with L1 Capital ..... by way of separate placements (the size of whichare subject to certain limits)"

Maybe this is what the clause alludes to - ie there are certain limits to the number of shares that can be issued.

But even if this was capped to under 20% of the company, over 100m shares would still be issued to L1. This would only raise $7m, and not even cover a further 2 quarters of cashburn at CHM. Also, there is the possibility that L1 won't feel comfortable owing such a large percentage of CHM, leading to SP pressure as it reduces its position.

So does Hopper pursue the usual Bell Potter / sophisticated biotech investor route, where he issues discounted shares to nameless entities along with millions of free options? Its been his modus operandi at Imugene, but the last two capital raises there are so far under water it might not be an easy sell here. Might require issuing shares at a massive discount (sub 4c?), and possibly also result is a significant share overhang that puts further downward pressure on the SP.

Hard to see how CHM can be funded for much longer without a huge dilution ....