Botanix Pharmaceuticals secures ~$45 million capital raise to fuel Sofdra growth
Botanix Pharmaceuticals (ASX: BOT) has received firm commitments for the Botanix Pharmaceuticals $45 Million Raise through a two-tranche placement and underwritten security purchase plan. The biotech company secured approximately $40 million via placement and $5 million through the SPP, both priced at $0.06 per share, representing a 45.5% discount to the last traded price before the trading halt on Friday, 13 February 2026.
The capital raise attracted strong support from both existing and new Australian and international institutional investors. Directors and the CEO demonstrated insider confidence by committing approximately $500,000 in aggregate. All participants in the placement and SPP will receive unlisted options on a 1:1 basis, exercisable at $0.06 each with an expiry date of 31 January 2027, subject to shareholder approval.
The placement will issue 666,666,667 new shares across two tranches. Tranche 1 will raise approximately $14.9 million (247,994,473 shares) within existing placement capacity, whilst Tranche 2 requires shareholder approval for the remaining $25.1 million (418,672,194 shares). An Extraordinary General Meeting is expected in late March or early April to seek necessary approvals.
Where the funds will go
The proceeds from the capital raise will primarily fund active pharmaceutical ingredient purchases, manufacturing components, and the establishment of an alternate API supplier. Additional allocations include advertising and marketing initiatives to support the expanded sales force, operating expenses, working capital, and transaction costs.
Securing API supply and reducing cost of goods sold
Current inventory levels are sufficient to support increased prescriptions generated by the expanded sales force through Q3 FY26. However, the company is required to purchase further API under its existing supply contract, with a substantial portion of raised funds directed toward immediate and future API purchases to meet strong demand for Sofdra.
The company is pursuing a dual-track supply strategy. Management is negotiating with its existing API supplier to spread upcoming purchase and payment obligations across future years. Simultaneously, Botanix is in discussions with alternate API suppliers, targeting a potential 25% to 40% reduction in COGS. Establishing an alternate supplier will require securing adequate upfront API supply to bridge the transition, with onboarding expected to complete in 2028. The company aims to establish the additional source in North America or Europe.
Given patent protection extends until 2040, management believes the COGS reduction initiative represents a worthwhile long-term investment that will materially improve gross margins whilst derisking the current single-source supply chain.
| Use of Funds | Strategic Purpose |
|---|---|
| API and manufacturing component purchases | Meet existing supply obligations and support strong Sofdra demand |
| Alternate API supplier setup | Reduce COGS by 25-40% and derisk single-source supply chain |
| Advertising and marketing initiatives | Support expanded 50-person sales force and drive prescription volume |
| Operating expenses and working capital | Maintain operational momentum during growth phase |
| Transaction costs | Cover capital raise expenses |
What is active pharmaceutical ingredient sourcing and why does it matter?
Active pharmaceutical ingredient sourcing refers to a pharmaceutical company’s procurement of the core chemical compounds that provide the therapeutic effect in a medication. For Botanix, the API in Sofdra is sofpironium, the anticholinergic compound that treats excessive underarm sweating.
Pharmaceutical companies typically rely on specialised chemical manufacturers to produce API at the required purity and scale. When a company depends on a single API supplier (as Botanix currently does), it faces concentration risk. Supply disruptions, price increases, or quality issues at that one supplier can halt production and threaten revenue.
By establishing a second API supplier, Botanix gains negotiating leverage and supply security. The company can continue manufacturing Sofdra even if one supplier experiences problems. More significantly, the alternate supplier offers substantially lower production costs, which translates directly to higher gross profit margins. Each unit of Sofdra sold generates more profit after deducting the reduced input costs.
Strategic catalysts ahead for Botanix
The capital raise positions Botanix to execute on several value-creating initiatives:
- Continued Sofdra growth supported by the expanded 50-person sales force
- Platform expansion through new product additions to the fulfilment infrastructure
- Supply chain derisking via alternate API supplier onboarding
- Potential Sofdra licensing agreements in additional geographic regions
- Enhanced positioning for merger and acquisition opportunities
Executive Chairman commentary
Vince Ippolito, Executive Chairman
“We were pleased to close the bookbuild for this Placement with strong support from our existing and new institutional shareholders, following a successful first year on the market and with continuing strong demand for Sofdra.”
Ippolito highlighted the company’s quarter-on-quarter growth trajectory since launch. The recent hiring of 27 additional sales professionals brings the combined sales force to 50 representatives. Management anticipates this expansion will drive increased prescription volumes over coming quarters.
“We expect the targeted funds raised will allow us to derisk our supply chain, secure API under our current supply contract and put us in a more favourable financial position. The Company is at an exciting stage of development and we look forward to our shareholders’ continued support under the security purchase plan and we welcome all the new investors to our register,” Ippolito stated.
Capital raise structure and timeline
The placement comprises two tranches totalling approximately $40 million. Tranche 1 will raise $14.9 million through the issue of 247,994,473 shares within the company’s existing 15% placement capacity under Listing Rule 7.1. Tranche 2 requires shareholder approval at the EGM for the issue of 418,672,194 shares to raise $25.1 million. Director and CEO participation of approximately $500,000 forms part of Tranche 2 and requires separate shareholder approval under Listing Rule 10.11.
The security purchase plan is underwritten up to $5 million by the Joint Lead Managers (Euroz Hartleys Limited and Canaccord Genuity (Australia) Limited), with the ability to accept oversubscriptions. The SPP will be offered to eligible Australian and New Zealand shareholders on the company’s register as at 7.00pm (Sydney time) on Monday, 16 February 2026. Eligible shareholders may apply for up to $30,000 worth of new shares per holder. The SPP requires shareholder approval at the EGM.
Participants in both the placement and SPP will receive unlisted options on a 1:1 basis for shares issued. The options are exercisable at $0.06 each and expire on 31 January 2027. Option issuance requires shareholder approval at the EGM. A prospectus for the offer is expected to be released to ASX in late February to early March 2026.
| Event | Date |
|---|---|
| Trading halt | Friday, 13 February 2026 |
| SPP record date | 7.00pm (AEDT) Monday, 16 February 2026 |
| Placement announcement and trading halt lifted | Tuesday, 17 February 2026 |
| Settlement of Placement Tranche 1 | Monday, 23 February 2026 |
| Allotment and normal trading of Tranche 1 shares | Tuesday, 24 February 2026 |
| Notice of Meeting for EGM and prospectus released | Late February / Early March 2026 |
| SPP opening date | Late February / Early March 2026 |
| EGM for Tranche 2, SPP and options approval | Late March / Early April 2026 |
| Settlement and allotment of Tranche 2 shares | Early April 2026 |
| SPP closing date | Early April 2026 |
| Settlement and allotment of SPP shares and options | Early April 2026 |
What this means for Botanix shareholders
The capital raise strengthens Botanix’s investment thesis across multiple dimensions. The 45.5% discount to the last traded price provides context for the entry point, whilst the attached options offer additional upside exposure at the same exercise price for participants.
The proceeds address near-term API purchase obligations under the existing supply contract whilst simultaneously funding the transition to a lower-cost alternate supplier. If successful, the 25% to 40% reduction in COGS will materially improve gross margins on each unit of Sofdra sold. The expanded 50-person sales force represents a 108% increase from the previous team of 23, positioning the company to accelerate prescription volume growth.
Beyond the immediate operational benefits, the capital raise enhances Botanix’s strategic optionality. The supply chain diversification reduces execution risk, whilst the strengthened balance sheet improves the company’s position for potential licensing agreements in additional territories. The strong institutional support demonstrated through the placement bookbuild validates the commercial progress achieved since Sofdra’s launch and provides a foundation for potential merger and acquisition activity.
The combination of revenue growth drivers, margin expansion potential, and derisked supply chain positions Botanix to execute on multiple value catalysts simultaneously over the coming quarters.
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