InhaleRx has signed a loan agreement with Melbourne-based Clendon Biotech Capital (CBC) to finance Phase 1 and Phase 2 clinical development of its cannabinoid drug candidates IRX-211 and IRX-616a.
The agreement gives InhaleRx access to up to A$38.5 million, which the company said should be sufficient to bring both candidates to the Phase 3 "pivotal stage" within two to three years. Funds can be drawn down as eligible expenditure is incurred.
Once the facility receives approval, InhaleRx said it will allow the company to "immediately activate the specification adjustment and batch manufacturing work required in the manufacture of the requisite trial drugs for the proposed IRX616a (Phase 1) and IRX-211 (Phase 2) trials".
Although the funding is expected to cover all clinical trial costs, InhaleRx will continue to bear responsibility for its own operational and corporate overheads.
The company said it "remains confident in its ability to secure the necessary additional funding to meet these working capital costs and ensure continued operational sustainability".
IRX-211 and IRX-616a are drug-device medications designed to deliver rapid onset relief for breakthrough cancer pain and panic disorder, respectively.
CBC is a Melbourne-based venture capital firm focused on small to medium-size biotechnology companies, with target therapeutic areas spanning neuroscience, gastroenterology, oncology and anti-ageing.
InhaleRx CEO Darryl Davies said: "This agreement enables [us] to focus on advancing our key clinical programs, including addressing the requirements outlined in FDA feedback on our recent IRX616a IND application."
In July, the US Food and Drug Administration (FDA) placed a temporary hold on the company's Investigational New Drug (IND) application for a Phase 1 clinical trial of IRX616a "in order to address certain safety concerns for the purposes of ensuring the highest standards of patient safety".
Under the terms of the loan, an interest rate of 15% per annum applies, with repayment tied to the completion of each project. CBC will also receive options in InhaleRx equivalent to 19.9% of ordinary shares on issue.
InhaleRx is required to repay the facility in cash, though it may use proceeds from the exercise of those options toward repayments. The facility is secured by a general security deed granted by InhaleRx in favour of CBC over all of its assets and undertaking.
