AFR Article. The picture looks quite apt for retail investors, unfortunately ...

Botanix Pharmaceuticals, a listed developer of treatments for skin infections and diseases, was pitching investors for a $40 million equity raise on Monday morning.

Botanix’s lead product is used to treat excessive sweating. Dion Georgopoulos

Street Talk understands the company had Euroz Hartleys and E&P Capital offering shares at 33¢ each – a 7 per cent discount to the last traded price and 13.8 per cent lower than the 10-day volume-weighted average price. The raise is structured as a single tranche placement to institutional investors.

Sources said a book message, which went out at the launch, said pre-launch bids from existing investors exceeded the total offer size. Key backers include founder Matt Callahan, Antares Capital Partners and Allianz Asset Management.

Botanix told investors the funds would accelerate the commercialisation of Sofdra in the United States – a prescription anticholinergic medicine used on the skin to treat excessive underarm sweating. This includes beefing up its sales force, increasing marketing expenses and stocking up on inventory.

The company went into a trading halt on Monday morning at 36¢ per share. Euroz Hartleys and E&P Capital were calling for bids by 3 pm.

Hasn't Matt Callahan got enough shares already.

Poor retail, that photo about sums up how I'm feeling.

Have to wait for the full details I guess

I seem to remember Matt and Howie clearly saying that a cap raise was not needed.

As I recall there was circa $48m in the bank and that was enough to see through the plan they keep publishing.

Is this Timeline shot? I wonder.

I suppose this is legit:

@Arizona for any company like this pre-revenue (with no guidance/bankable targets) and/or pre positive cashflow company, take any claims for being fully funded with a grain of salt as that is what companies like this will say when pressed. Its a game of brinkmanship in promoting such an outcome as saying otherwise will kill the share price even more making the raise more dilutive. There is a degree of ignorant bliss required to ensure that next raise is done at a the best relative price and ideally into strength of traction of building up sales from a product launch.

Ultimately it is up to the investor to determine f the claim of being fully funded is legit or not and not to just take management statements at face value. One may now claim they "lied" but there is a list of caveats that can be pointed too that will support it being truthful at that moment of time.

I may not know BOT as well as many posters here but I'm not sure why a raise should be a surprise given the risk in sales trajectories and the base level of opex and burn rate.

@Arizona

From my numbers they easily had enough cash to get until positive based on the updated Jan quarterly spend and factoring in the first lot of sales hires with a modest launch.

Think my numbers had them bottoming out at around $20m in the bank based on a launch similar to what they are achieving now.

My thoughts are that if they are getting 1000/month from prescribers and 1000/month from the online targeting with the machine set to 5 then it makes sense to turn it up? A few more reps and a few more marketing dollars?

The first part of that timeline is shot to shit, e.g IHHS 18,000 and 1M target list and the PEP was 3 months late but nevermind.. 1 point to them was the launch meeting was on time...

Maybe the other thought is if they are seriously looking at bolt acquisitions for the platform, better to be looking at the $40m they might need than looking for it, if something comes up.

So in summary, I feel lied to about the timeline but think yes the launch was fully funded but not the aggressive launch. They did talk about knowing around June where the marketing spend would lie but I guess if its clear that more $$ marketing is direct into more sales then crank the lever up.

Interesting it does say 'platform expansion' in there..

@BkrDzn Sound advice. Of course you are right. One would think that after all these years wondering planet earth, that I would have gotten over being "misled", but time and time again, I get surprised when it happens. Its something I need to continually work on.

I look forward to Matts Strawman interview in the coming weeks.

Onward and Upward

@Schwerms I felt they had enough to see out the timeline and then some.

I'm trying to make something of those figures in the Term Sheet. There is not a lot to go on here and I may be getting the wrong end of the stick, but here goes....

Ai tells me that:

"A prescriber is a healthcare professional authorized to write prescriptions for medications."

1000 prescribers a month seems to be impressive, if I understand that correctly. Presumably they aren't making a purchase, but have the ability to bring in more sales over time. A fly wheel of sorts? I guess that prescribers sign up in some way and that's how this is measured.

New patient arrivals @ 2000/month seems underwhelming (but it's early in the game). It would indicate that after 9 weeks, they have Approx 5,000 people signed up and buying SOFDRA? If that is right, then to date, they havent even come close to capturing a decent portion of that 18,000 cohort from the IHHS.

Now maybe we can argue that 5,000 patients is approx 30% of the 18,000 IHHS members. They are the cohort who have known about SOFDRA in any real way, for the last 6-8 months. Maybe at this stage that's a win?

Refills are at 100%. Can't ask for better than that. However, it is early days and there hasn't been a whole lot of time to drop out.

I may be reading this all wrong. I'd be interested to hear other peoples readings of the term sheet.

I think it means 2 sources of scripts.

1000 a month direct to consumer via platform digital channel

1000 month originating from derms.

2000 a month for 12 months is 24000 with no droppoffs.

24000people x450USD a month is 10.8m USD.

If they were to add 2000 / month up until June 2026 that would be 15.3m USD that month. sounds like they can increase that initial growth rate with more people.

We would be starting to get in the ballpark of my 200m revenue by June 2026 it that happens.

If you tweak the customer acquisitions by even +10% a month on the existing it gets exciting. I need to get my spreadsheet out.

Yes @Schwerms if (and its a big IF), 2,000 new patients keep getting added out to EOFY26, then that could achieve FY26 revenue in the ballpark of $160m, with an exit run rate of $250m p.a.. (Which is above my high case!!)

As early as a month ago Matt and Howie were "out there" telling investors they were confident in the analysts projections of $100m revenue in FY26. So, this is consistent with that picture as they were making these statements off only 5 weeks sales data.

It looks like this product is getting early traction, even though they are yet to ramp-up and "optimise" the online marketing.

It is way too early to pop the champagne corks. But it does look promising.

Sure is out of left field

I wasnt expecting that.

@Schwerms I was not expecting this, however, their cash burn rate is so high that I had it as a risk (despite their assurances!) - see below.

I WAS expecting them to raise AFTER the initial sales report was out, because they have been clear they want to put more products through their platform (telehealth, e-fulfillment), and so they will likely have to make a chunky payment at some point as part of any future licencing deal. But $40m (EH note) doesn't cover that, and it probably just contributes funds towards their ongoing scouting, negotiations and due diligence of targets. We should expect another raising if they licence in another product, if this one is only for $40m. While I'm not happy to be deluted 7%, it could be worse. But I think the lion's share is funding inventory and expanding sales and marketing.

I am surprised that they haven't used debt to bridge the gap, because it looks like sales growth is going to be strong.

At 31-Dec-24 they had $48m cash and, by my assessment, are burning cash at an annual rate of around $60m, BEFORE hiring the sales force and BEFORE expanding the saleforce and BEFORE dialling up online ad spending. So, I am going to have a careful look at expenses growth for 2H FY25, when we get that report!

In the early months even if they are adding 2,000 patients per month, that doesn't bring a lot of cash through the door. 2,000 patients represents annual revenue run rate of about A$16m (or A$1.33m per month). $40m buys them 6-9 months, by which time monthly revenue by my assessment could be $10-12m, and they start generating cash by that time.

So it looks to me as though they had between 2 and 3 quarters of cash left at the start of year, which means without a raise they'll run out in 1 or 2 quarters from today. And now they probably need to manufacture more product, and pay more to hire more staff, and soon start ramping up the online ads. So, it makes sense based on the numbers we had.

Judging by the EH note @Arizona has posted, the early patient enrolment numbers are promising. But there is so much we cannot know about how this will trend into the future. Two months in, it says they are adding 2,000 patients a month, while also adding 1,000 prescribers - which should lead to continuing expansion of the number of new patients.(This is a number you'd expect from a Sales Forece of 27 at launch). If this number grows and can be sustained for a period, then we could be on to a winner.

By comparison, last year Journey Medical Corporation said they had added 4,000 patients y-o-y. So, $BOT appear to be adding patients at six times the rate of QBREXA. (Phew, because QBREXA is a bit of a flop).

The "2,000 new patients per month" and +"1,000 new prescribers per month" are the first tangible revenue drivers we 've seen. And they are promising. But we need to see how they trend over several months to be able to draw any conclusions. Of course, management will have more detail, and so the question is whether they have enough information to be able to set expectations for any floor under revenue for FY25 and FY26. And even if they do, are they prepared to put it out there to shareholders?

Obviously, I want to hear the investor briefing, as the picture painted in the pages we've seen from the EH note don't really tell me enough. But what it does tell me, is promising enough.

On the 7% dilution at $0.33, this would of course be a LOT less if the SP was $0.45, or $0.50, or $0.70. So I am a bit bothered that they couldn't get some sales numbers out there first which, if promising, I beleive would have significantly driven the SP. Clearly, they would if they could, so they must be running out of cash and be stucked between a rock and a hard place. Damn.

In conclusion, they are expanding sales and marketing even though it is forcing them to go cap in hand to investors. To me, that signals confidence in the sales growth trajectory and the desire to accelerate sales growth. But in these business you do have to keep an clear eye on expenses growth too!

Euroz probably looking for work to do and managed to convince Botanix to do capital raise with them as lead manager

Euroz definitely the king of capital raisings. Don't really trust them to be honest

Held

Hopefully this mornings webinar will shed some light on the situation.

The notes in the cap raise look pretty good re weekly prescribers and total prescribers who have already done at least one script. Very interesting

Yes, this is looking like a pretty impressive launch so far. (Glad I topped up last week, as their appears to me no retail component for the capital raising. I wonder how much management will be participating?)

With new prescribers being added, new territories being covered (note: their exapnded map is pretty much as I predicted recently from the job adverts) and the online, DTC channel yet to make a significant contribution, this is starting to look pretty exciting.

Their revenue pick from Feb to March of A$1.5m to $3.2m is well ahead of my model which was $1.4m to $2.9m.

So, @Schwerms perhaps your $200m for FY26 is not going to be far off the money!

Again, early days, and unclear how much of a bolus effect we are getting from the 18,000 IHhS members?

I'm joining the call at 11 for sure.

If the analysts start modelling this and matching to other adoption curves, we might see some nice upgrades coming through!

I don't have time to jump on the webinar but I will watch it back when possible with interest. I too was looking to top-up my holding but my order didn't take. I was actually relieved once the trading halt/cap raise was announced. However, maybe the price will get away from me now but I won't be too disappointed if that is the case.

Just to add further to my point...

If Botanix thought they were on a winner, I think Botanix could have tried to fund via debt and not line the pockets of Euroz and their mates.

Euroz is a serial offender of raising for their mates.

Probably this shows a lack of experience or patience from Botanix on raising money more than anything else.

Doesn't really detract from the thesis from the presentation though but this raise is annoying.

Just on Euroz and CRs @edgescape - I can understand why they push for them; it's where they make their money, in multiple ways, through fees, share placements to clients, and through underwriting arbitrage at times also.

Euroz Hartleys primarily specialises in raising capital for Western Australian ASX-listed companies (Botanix Australian HQ [registered office] is in West Perth), and EH have a strong focus on microcap and small cap resources, energy, mining services, industrial, and biotech companies, particularly those HQ'd in Perth.

Because WA is so geographically distant from Australia's east coast where most of the deals happen, there is a bit of a silo mentality, using local WA companies where possible, and when raising capital the extensive network that EH have developed over the decades is valuable. There are still probably more billionaires per square metre living in Peppermint Grove, Mosman Park, and Dalkeith (collectively known as Perth's "Golden Triangle") than anywhere else in Australia. And EH obviously also liase with their east coast counterparts and with HNW Individuals across Australia as well as their local WA clients.

Also, while Botanix is not a company I follow, because they're an early stage biotech, I agree 100% with @BkrDzn (Joshua knows his stuff!) when he said yesterday in this thread:

• "...for any company like this pre-revenue (with no guidance/bankable targets) and/or pre-positive-cashflow company, take any claims for being fully funded with a grain of salt as that is what companies like this will say when pressed. Its a game of brinkmanship in promoting such an outcome as saying otherwise will kill the share price even more making the raise more dilutive. There is a degree of ignorant bliss required to ensure that next raise is done at the best relative price and ideally into strength of traction of building up sales from a product launch."
• "Ultimately it is up to the investor to determine if the claim of being fully funded is legit or not and not to just take management statements at face value. One may now claim they "lied" but there is a list of caveats that can be pointed too that will support it being truthful at that moment of time."

Agreed - I have lost count of the number of small gold explorers and project developers I've followed who claimed to be fully funded and raised capital within a couple of weeks of saying that. Fully funded just means that at the time that statement was made, the company's management were of the view that a CR was not necessary. However, not necessary and not desirable are two very different concepts.

You can be fully funded and then decide very soon afterwards that you have an opportunity in front of you (an opportunity which may even have been presented to you by a broker like Euroz Hartleys) to fast-track your growth, or expand, or retire debt, or close out a hedge book, or simply strengthen your own balance sheet above and beyond the cash you already hold, etc., and if you believe that opportunity should be taken as it's in the best interests of the company and it's longer term value, then it can be argued that it's also in the best interests of shareholders, as long as they are patient shareholders who are prepared to go the distance and let the thesis play out over time.

I always got super pissed off when a company I held shares in said they had no immediate need to raise capital and were fully funded, and then announced a CR shortly afterwards, but I have recently come to the same conclusion as @BkrDzn that it's part of management's job to say the right things at the right time and to ALSO take advantage of good opportunities when they present themselves, even if that leads to behaviour that appears to contradict their own guidance at times.

That's not to say that all capital raises are good; that's clearly not the case, but we have to judge each individual situation on its merits I reckon.

So, yeah, I also now take these "fully funded" claims with a grain or three of salt and my personal opinion is that ANY company that is pre-revenue or pre-cashflow-positive is a good chance of springing a surprise CR on us at any time, and it's just part of the price of admission with early stage companies.

All that said, this is general commentary from me, as I don't follow this particular company, so I don't have any views specific to this particular raising.

Well the webinar was encouraging enough for me to top up at 0.385, I was hoping the price would drop to the offer price of 0.33 but I suspect that is unlikely, if it does I would top up again.

My basic take is they have 3,500 patients prescribed to date via the prescriber channel which is sales team lead after 9 weeks. My rough estimates are they need 11k patients to break even and at the current run rate of 2,500 per month (increasing) they will be there in 3 months. Factoring in payment delays and cost to ramp up the sales team to accelerate growth, I can accept the need for additional capital to make hay while the sun shines.

Also, as pointed out they are on track to analyst forecasts for FY26 using very modest assumptions on refills AND they are yet to start the digital channel!!!

This is a very very good start, long may it continue!

@Bear77 and @edgescape IBs are always pushing their "services". But I think that line of argument misses the point with $BOT.

Ultimately Vince and Howie are in charge and very experienced. They've done this because they believe it makes sense, and I don't think it has anything to do with advice from EH.

It is very clear to me that these guys are burning a lot of cash, and were down to a quarter or two remaining, at best. They probably had no choice.

On the webinar, they've made the case that this product appears to be highly responsive to promotional activity. So, they simply want to accelerate the adoption curve by pushing harder on promotional spend. That means more reps, more ads, more inventory.

In addition that want to bring on a second supplier, for security of supply and to support peak sales. They'll have to pay the new contractor(s) for tech transfer and validation costs, which ain't cheap.

Howie has made it clear that they have analysed the early sales against previous products they've had experience with, and that this confirms the demand response to promotional activity. (This is something that pharmacos. do as a matter of routine, because it helps them in allocating resources in sales and marketing across their product portoflios. Its not something I think EH would add anything to. In fact, this is the kind of decision-making where we as shareholders get the benefit of the $BOT team's experience in having launched 30 dematological products. That's why I am back this management team. Only they can make these calls.)

These are all things they planned to do. They said they were initially planning to take stock in June. But realising how well sales are responding to the promotional activity, they've decided it is more valuable to act now, even if the SP has been knocked back by the general risk off macro. It makes sense perfect to me.

Each 2,000 new patients per month are adding A$1.4m revenue per month or $17m p.a. Based on the last week of 571, that's a monthly run-rate of 2,400+. Howie has said that at 2,000 new paitents per week and 6-refills, they'll hit the analysts numbers for FY26 (which are just north of $100m, I think). But they are only track to hit 11 refills, and on a clear trend that shows new adds cotninuing to grow, with the benefit of sales force expansion and online DTC yet to kick in.

Give the strong contribution margin of every new script, I totally want them to accelerate the adoption curve, and I am happy to be diluted by 7% to achieve that.

So to return to yesterday's speculation about the reasons for the capital raise, I conclude as follows:

• They are burning a lot of cash and didn't have much $$$ left
• There is a strong ROI on promotional spend to accelerate adoption
• Therefore, they needed more money now.

The analysts PT numbers don't account for any acceleration. So, I'm pretty sure they'll have to have a go at modelling the impact and it will give a PT uplift in the near future.

Disc: Held in RL and SM

Totally agree @Tom73 - with the queue volumes currently having 2 buyers for every seller, even after instos have swallowed $40m worth, I am glad I topped up last week at $0.35 and $0.36, because I'm not sure we'll get many chances to revisit those levels.

Remember, the current share price suppression is caught up in the tariff sell-off, and Howie made clear how even at 25% on COGS, its a few bucks on something that sells for $450 per refill, so they can swallow the tariffs without blinking (even though they'd prefer not do).

We just have to hope that Canada and/or Pharma doesn't spiral off into ridiculous tariff territory. I put that likelihood as low, because the US healthcare system relies too much on imported products, and I don't think Trump wants to stop American's from getting their meds.

Now if the Adminstration goes after SELLING PRICE, then that's a whole different kettle of fish, and that is something to monitor.

Its a Cap raising.

Disappointing after assurances that there would be no more needed.

Perhaps I need to keep my mind open. This could relate to another product to add to the platform.

Would be nice to know how the first product is fairing.

Sorry, yes that’s what I meant: what else would they need to raise for - I’m hoping it’s acquisition of a new product to leverage the success of the platform.

My fear is it’s… not that.

I can't read apparently.. must be going blind.

I'll be upset if sales numbers are announced, alongside an institutional capital raise. I recall they did something like this with final Sofrdra approval. It was annoying but at least there was objective (funding the rollout).

I was just thinking worst case is it not going that well, they need more reps and now know they won't make cashflow positive before they run out of cash and better to raise now then after they put out a disappointing quarterly that puts the share price into the shitter?

I'm more thinking something for the platform given Howie and Matt were both talking about it in the stockhead etc interviews Mid March.