Botanix Pharmaceuticals has launched a A$45 million capital raising to support the expansion of its dermatology product Sofdra®, while negotiating to reduce active pharmaceutical ingredient costs by up to 40%. The raising includes a two-tranche placement and a security purchase plan, with options offered to investors.
- A$45 million capital raising via two-tranche placement and underwritten SPP
- Strong Sofdra® growth – 62,500 prescriptions, A$21.2 million net revenue
- Negotiations underway to reduce API costs by 25–40% and diversify suppliers
- Options offered to investors exercisable at A$0.06, subject to shareholder approval
- Funds allocated to API purchases, alternate supplier setup, marketing, and working capital
Capital Raising to Support Growth
Botanix Pharmaceuticals Limited (ASX – BOT) has announced a significant capital raising initiative targeting approximately A$45 million before costs. The raising is structured as a two-tranche, non-underwritten placement to institutional and sophisticated investors, combined with an underwritten security purchase plan (SPP) for eligible shareholders. This capital injection aims to underpin the company’s ongoing expansion of its flagship dermatology product, Sofdra®, and to strengthen its supply chain and marketing efforts.
The placement comprises an initial tranche of nearly 248 million shares raising about A$14.9 million using the company’s existing ASX Listing Rule 7.1 capacity, followed by a second tranche of approximately 419 million shares raising A$25.1 million, which is subject to shareholder approval at an extraordinary general meeting (EGM) expected in late March or early April 2026. The SPP targets an additional A$5 million, also subject to shareholder approval.
Sofdra® Performance and Market Opportunity
The company has expanded its sales force to 50 professionals, driving demand and further penetration in the primary axillary hyperhidrosis market, which affects an estimated 10 million patients in the United States alone. Market research indicates that 90% of surveyed healthcare professionals expect to increase Sofdra® prescribing in the coming six months, underscoring the product’s growing acceptance.
Supply Chain Strategy and Cost Reduction
Botanix is actively negotiating with its current active pharmaceutical ingredient (API) supplier, Kaken Pharmaceuticals, to spread upcoming payments and improve terms. Concurrently, the company is selecting an alternate API supplier located in North America or Europe to diversify supply and reduce risks associated with single sourcing.
If successful, these negotiations could reduce the cost of goods sold (COGS) by 25–40%, significantly enhancing gross margins. The alternate supplier strategy also aims to reduce the fill volume per Sofdra® bottle, supporting higher refill rates and regulatory compliance for a 30-day supply.
Use of Funds and Investor Incentives
Proceeds from the raising will be allocated primarily to API purchases and manufacturing components (approximately A$12 million), alternate API supplier setup (A$4 million), advertising and marketing initiatives (A$13.5 million), operating expenses and working capital (A$13 million), and transaction costs (A$2.5 million). The company retains flexibility to adjust these allocations as circumstances evolve.
To incentivise participation, Botanix plans to offer unlisted options to investors on a one-for-one basis with new shares issued under the placement and SPP. These options will be exercisable at A$0.06 each, expiring on 31 January 2027, subject to shareholder approval at the EGM.
Risks and Outlook
While the capital raising positions Botanix to capitalise on Sofdra®’s momentum and improve supply chain economics, several risks remain. The placement is not underwritten, so full subscription is not guaranteed. Shareholder approval is critical for the second tranche and SPP. The success of API negotiations is uncertain and could materially affect cost savings and supply security. Additionally, the company faces typical pharmaceutical sector risks including regulatory approvals, competitive pressures, and foreign exchange volatility.
Botanix’s management team, with extensive dermatology experience, remains focused on executing growth strategies, expanding product offerings on its fulfilment platform, and pursuing potential mergers and acquisitions in a favourable market environment.
Bottom Line?
Botanix’s capital raise and supply chain initiatives set the stage for scaling Sofdra®’s success, but investor approval and execution risks loom large.
Questions in the middle?
- Will shareholder approval be secured to complete the full A$45 million raising?
- Can Botanix successfully negotiate lower API costs and secure a reliable alternate supplier?
- How will Sofdra®’s growth trajectory sustain amid competitive and regulatory challenges?