Trellus Health secures $0.6m loan from longstanding shareholder

(Sharecast News) - Trellus Health announced on Monday that it has secured a $0.6m unsecured loan from its longstanding shareholder, the Icahn School of Medicine at Mount Sinai, to support its commercial strategy and extend its cash runway into late January, as it continued discussions over a potential equity raise. The AIM-traded firm said the loan note would be interest free for the first six months and would then accrue interest at 8% annually, payable in cash or new shares at the company's discretion upon conversion.

It said the note would mature in 12 months, at which point Trellus may redeem it, convert it into ordinary shares, or use a combination of both at a conversion price of 0.525p, equal to the five-day mid-market price prior to signing.

Any conversion was capped to prevent Mount Sinai from holding more than 29.9% of the company's issued share capital.

Trellus said the funding would provide additional time to progress discussions over a potential equity fundraising, which it described as being at an advanced stage, though it cautioned there was no guarantee of success or timely completion.

The company said it was continuing to pursue commercial contracts with pharmaceutical firms and contract research organisations, where typical deal values ranged from $0.5m to $1m for pharma and between $0.15m and $0.5m for CROs, excluding performance-related fees.

"We are extremely grateful for Mount Sinai's continued support, which enables us to focus on executing agreements with pharmaceutical companies and CROs," said chief executive Dr Marla Dubinsky.

"Over the past month, we have signed contracts with two leading global CROs, reaffirming both the value of our offering to the pharmaceutical sector and our ability to secure and deliver on partnerships with industry leaders in drug development and clinical research.

"We have already begun implementation for the phase 2B and phase 3 trials with these partners and expect to launch the initial TrialSet programmes by year-end."

Trellis said the loan note constituted a related-party transaction under AIM rules as Mount Sinai holds 25% of Trellus's shares.

The board, excluding directors connected to Mount Sinai, said the terms were fair and reasonable following consultation with its nominated adviser.

At 1217 GMT, shares in Trellus Health were up 14.29% at 0.6p.

Reporting by Josh White for Sharecast.com.