Defence Therapeutics arranges $11-million financing

Executive Summary

• Defence Therapeutics Inc. announced a private placement of up to 20 million units at 55 cents per unit, targeting gross proceeds of up to $11 million.
• The company has executed a binding term sheet with two institutional investors for $6 million in gross proceeds, subject to CSE approval and expected closing around March 6, 2026.
• Proceeds are structured via an escrow and sharing agreement, where cash is released to the company in monthly tranches contingent on share price performance against a benchmark, with potential for the company to receive more or less than the initial $6 million.

Key Details

• Offering Structure: Private placement of up to 20 million units at $0.55 per unit.
• Unit Composition: Each unit consists of one common share and one common share purchase warrant.
• Warrant Terms: Each warrant allows the holder to acquire one additional common share at an exercise price of $0.65 per share for 24 months. Warrants include an equity blocker provision limiting ownership to 9.99% of outstanding shares.
• Investment Amount: Binding term sheet signed with two arm's-length institutional investors for aggregate gross proceeds of $6 million.
• Escrow and Payment Mechanism:
  • Proceeds and units are deposited in escrow pending closing.
  • Upon closing, funds are released as credit support under an ISDA credit support annex.
  • Funds are released to the company in monthly cash tranches of $333,333 over an 18-month period.
  • Settlements under the sharing agreement commence five months after closing.
• Sharing Agreement Terms:
  • Shares are released in equal monthly installments of approximately 606,060 shares over 18 months, contingent on cash payment delivery.
  • Economic interest is determined in 18 monthly settlement tranches against a benchmark price of $0.7332 per share.
  • If the settlement price (20-day VWAP on CSE) exceeds the benchmark, the company receives more than 100% of the monthly settlement pro rata with no upper limit.
  • If the settlement price is below the benchmark, the company receives less than 100% pro rata.
  • A decline in settlement price does not increase the number of shares issued to investors.
  • Total proceeds may be materially more or less than the original $6 million depending on future share price fluctuations.
• Fees and Costs:
  • Corporate finance fee of $360,000 payable in cash or via issuance of 654,546 units at the private placement price.
  • Non-refundable deposit of $65,000 payable upon CSE approval, satisfied by issuance of 118,182 units.
• Use of Proceeds: Advancing antibody drug conjugate (ADC) and radiopharmaceutical programs, developing partnerships, and working capital purposes.
• Closing Date: Expected on or about March 6, 2026, subject to CSE approval.
• Resale Restrictions: All securities subject to applicable Canadian securities law resale restrictions.