Solbec to fund trials through equity facility

Perth biotech Solbec Pharmaceuticals (ASX:SBP) has followed in the footsteps of small resources companies in setting up a $5 million facility known as a standby equity distribution agreement through US-based investment fund, Cornell Capital Partners.

Cornell Capital has committed to provide up to $5 million to Solbec at any time over the next five years at Solbec's discretion by the issue of shares to Cornell Capital.

The share price will be the greater of the minimum price set by Solbec or 98 per cent of the weighted average market price of the shares during a defined 10 day period following a draw down notice. A commission of five per cent is payable to Cornell Capital upon issue.

Solbec chairman Tony Kiernan said the facility would supplement Solbec's $2.3 million cash at hand to progress clinical trials of the company's lead compound Coramsine - which have been budgeted to cost $3.5 to $4 million over the next 12 months.

"All up it should be enough to get through Phase II trials," he said. "We're still doing preliminary work on which cancers will be the subject for the Phase II trial."

Kiernan said the company would still consider a separate secondary capital raising if market conditions were good.

"We'll obviously need to source capital from somewhere, and if the market remains flat it will be available to us [through this facility]," he said.