Nexalis Therapeutics ended September with $371,000 in cash, equivalent to just 0.9 quarters of funding at its recent operating burn. The company has settled its dispute with Linlithgow Family Office, but its clinical programs remain paused while it pursues R&D tax funding and a new capital raise.
- $371,000 cash balance after $419,000 quarterly operating outflow
- LFO facility terminated with no repayment obligation and security released
- RDTI forward funding targeted for the December 2026 quarter
- Capital raising planned, with timing and structure undecided
- IRX-616a Phase 2 and IRX-211 Phase 2 remain dependent on funding
Nexalis faces a 0.9-quarter funding runway
Nexalis Therapeutics Ltd (ASX:NX1) finished the September quarter with only $371,000 in cash after an operating cash outflow of $419,000. On the company’s own calculation, that represents 0.9 quarters of funding, leaving the proposed clinical program restart dependent on financing that has not yet been secured.
Cash fell from $790,000 at the end of June, while clinical and corporate spending continued despite limited trial activity. Nexalis spent $202,000 on clinical development, $181,000 on administration and corporate costs, $22,000 on staff costs and $14,000 on investor relations during the quarter. The company said it has already implemented cost reductions and expects further cuts to reduce future operating outflows.
LFO settlement removes debt but not the funding problem
The quarter delivered one important balance-sheet resolution. On 27 August, Nexalis reached a settlement with Linlithgow Family Office that terminated the facility, released LFO’s security over the company’s assets and allowed Nexalis to retain funds previously advanced without repayment. The settlement follows the earlier funding facility cancellation, which had left the company’s financing arrangements in flux.
As part of the agreement, 38,449,145 options previously issued to LFO were cancelled and replaced with 15 million options exercisable at $0.15 each and expiring five years from 30 October 2026. Nexalis had recognised a $641,848 current liability for the facility at 30 June. The settlement means that liability is no longer described as repayable, but it also leaves the company with no financing facilities in place at quarter end.
RDTI funding is the immediate bridge
The release of LFO’s security has enabled Nexalis to pursue forward financing against its 2026 Research and Development Tax Incentive claim. The company is working with RSM and prospective financing partners on a Letter of Comfort covering eligible research and development activities between 1 January and 30 September 2026, with the forward facility expected during the December quarter. Its amount, interest rate, lender and maturity have not been finalised.
Nexalis also intends to undertake a capital raising to fund operations and clinical development, although it has not decided the timing or structure. The board said it expects to continue operating on the basis of RDTI funding, cost reductions and the proposed raise, while managing expenditure against available cash. Those plans remain prospective rather than completed sources of funding.
Clinical work is prepared but still paused
Clinical progress was limited during the quarter because study orders with iNGENū remained suspended after LFO funding was withdrawn in May. A settlement deed with iNGENū was still in draft at the reporting date; execution is expected to allow close-out work on the IRX-616a Phase 1 study, including database lock, tables and listings and the Clinical Study Report.
IRX-616a completed its Phase 1 study in 24 healthy volunteers with no serious adverse events reported, building on the IRX-616a Phase 1 results disclosed earlier. Nexalis has drafted a Phase 2 protocol and obtained site and CRO quotes, but the study cannot move ahead until funding is available. IRX-211’s Phase 2 trial has also been reshaped around lower-cost terms with Genesis Care and a South West Sydney site, while the original Vitalis lead site is no longer considered active. SRX-25 remains in planning.
New chairman arrives as financing becomes the key test
Sean Williams resigned as chairman and director on 2 October, with Niv Dagan appointed non-executive chairman. Dagan brings more than 20 years of experience in capital markets, corporate advisory and institutional investment, according to the company.
The immediate test for the renewed board is not the availability of protocols or trial sites, but whether Nexalis can convert the expected RDTI financing and proposed capital raising into cash before its current balance is exhausted. Until that happens, the company’s prepared pipeline remains just that: prepared, rather than restarted.
Bottom Line?
The LFO settlement clears a legal and security obstacle, but Nexalis still needs executable funding before its clinical pipeline can move from readiness to recruitment.
Questions in the middle?
- When will the RDTI Letter of Comfort and forward financing facility be completed, and how much cash will they provide?
- What terms, timing and potential dilution will accompany the planned capital raising?
- When will the iNGENū settlement be signed and the IRX-616a and IRX-211 programs formally restart?