The Week’s Largest Closed Equity Transaction:

• On February 27, 2023, Transcend Therapeutics (Private),  a company focused on a next-generation psychoactive compound, methylone, closed a $40M Series A funding round.
• Alpha Wave Global and Integrated Investment Partners led the round with participation by Emerald Development Managers and Global Founders Capital Management GmbH.
• The proceeds will fund a Phase 2 study on its TSND-201, the proprietary name for the company’s methylone compound. The compound is short-acting with mild psychoactive effects, requiring less clinician time.
• Psychedelics are off to a strong start in 2023. It is the only sector of the 12 we track that has raised more capital in the last twelve months than in the prior year period. Psychedelics depend on regularly accessing the private and public capital markets since most companies are pre-revenue and burning cash for drug development and clinical trials.
• The graph below takes the current cash balances of each company and subtracts projected free cash flows for 2023. For the companies that do not have consensus estimates, we have annualized the most recent quarter’s cash flow from operations minus capital spending. To put the companies with widely varying sizes on a common footing, we divided the cash surplus (need) by market cap. The liquidity situation is a mixed bag – some companies (generally the larger cap ones) have more than adequate liquidity. Others, however, like one of this week’s equity raisers Braxia Scientific (BRAX: CSE), show relatively large funding requirements. According to our estimates, Braxia may need to raise funds equivalent to approximately 90% of its current market cap, a rather imposing task.

Public vs. Private Raises: 

• Five of this week’s seven capital-raising companies are public. Four trade in Canada on the CSE and four in the U.S. on the OTC.

Equity vs. Debt Cap Raises: 

• Equity accounted for 100% of the capital raises this week.