Regulation A+ allows companies to raise up to $75M per year from both accredited and non-accredited investors. A common question founders have is whether it is really possible for a life sciences company to do raises of that size via Reg A+, especially if they’re pre-revenue, even pre-clinical. And the answer is yes.
(EHP) is a clinical-stage biopharmaceutical company focused on developing a new class of proprietary molecules targeting neurodegenerative and autoimmune diseases, including multiple sclerosis, Parkinson’s, and Huntington’s. They have completed Phase I clinical trials and are enrolling for Phase IIa.
They filed their Reg A+ in March 2018 ( / ), offering 10 million shares at $5/share, for the maximum allowable raise at the time of $50M. Note that their didn’t start until September 2018, so at the time they filed, they were not only pre-revenue, but pre-clinical.
In 2019, they rolled into a continuous offering (which you can do every 12 months). This approach is one of the distinct advantages of Reg A+, providing the potential for an ongoing, long-term strategic capital platform. In July 2019 they amended the offering, upping the stock price to $6/share (). This is another advantage of Reg A+: the ability to change the offering price during the offering.
In March 2021, they announced the closing date of their offering, and that they had raised $56 million so far (). According to their subsequent , they ended up with gross proceeds of $60 million from their Reg A+ raise.
Regulation A+ is still fairly new in the medical innovation sector. While there have been some great success stories, such as and , it’s only very recently that companies in this industry have started taking advantage of the larger amounts of capital (up to $75M a year) available with Reg A+, and to understand its benefits that make it an attractive and viable alternative to venture capital. We expect to see many more examples like this one in 2021 and 2022.