Neurizon clears Obsidian notes as A$6.3m equity funding targets ALS milestone

Equity funding replaces planned convertible drawdown

Neurizon Therapeutics Limited (ASX:NUZ) has opted to fund the run-up to its most important clinical milestone with equity rather than another immediate drawdown under its Obsidian facility. The biotechnology company has secured firm commitments for a A$4.3 million placement at A$0.068 a share and is targeting a further A$2.0 million through a share purchase plan.

The placement involves 63.2 million new shares and represents a 20.9% discount to Neurizon’s A$0.086 closing price on 28 October, as well as an 18.9% discount to its five-day volume weighted average price. The SPP will give eligible Australian and New Zealand shareholders the chance to apply for up to A$30,000 of shares at the same price, although it is not underwritten and may be scaled back.

The capital raising comes as Neurizon moves towards topline results from Regimen I of the Phase 2/3 HEALEY ALS Platform Trial, expected in late Q2 2027. The trial completed enrolment of 250 participants in July. Recent FDA single-trial feedback identified a potential route to traditional approval using the study as a single registrational trial, but only if the results demonstrate substantial evidence of effectiveness.

All Obsidian notes are now redeemed

Alongside the equity raise, Neurizon has paid US$915,750, approximately A$1.31 million, from existing cash reserves to redeem the 750,000 convertible notes still held by Obsidian. No convertible notes remain on issue. Including the 1 million notes redeemed in September, Neurizon has now retired 1.75 million of the 3.5755 million notes issued in February.

That decision removes the immediate possibility of dilution arising from conversion of the outstanding notes and allows the company to withdraw the AGM resolution that would have authorised another issue of convertible notes to Obsidian. Neurizon says it will not make further drawdowns under the facility until at least April 2027; any later drawdown would require shareholder approval. The move completes the company’s remaining note redemption after the earlier transaction reduced Obsidian’s note holding to 750,000.

Free options add a second layer of potential dilution

The cleaner debt position does not mean existing holders escape dilution. Placement and SPP participants are intended to receive one free option for every new share issued or subscribed for, subject to shareholder approval. Each option would carry a A$0.12 exercise price and expire 18 months after issue, with ASX quotation also subject to the exchange’s requirements.

If exercised, the options would create additional shares. If the share price does not exceed A$0.12 during the exercise period, however, the options could expire without value. Director participation of A$100,000 in the placement also requires shareholder approval at a general meeting expected in December.

Cash will support clinical and regulatory preparation

Neurizon says the funds, existing cash and anticipated R&D tax incentive refunds are expected to fund the HEALEY trial through topline readout. Spending is also earmarked for manufacturing and supply-chain readiness, regulatory work, business development, potential strategic partnerships and corporate costs.

The company is also preparing an NIH-funded expanded access program expected to provide NUZ-001 to about 200 additional ALS patients in the United States. NUZ-001 remains investigational and is not approved for commercial use in any jurisdiction, while the company’s own risk disclosure makes clear that future development and commercialisation will require further funding beyond the upcoming trial milestone.