Thursday 3rd January 2019
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Dietary supplements company Promisia Integrative has raised $1.35 million from its 3-for-1 rights issue, well above the underwritten $1.05 million amount, despite the company making no bones of how risky a proposition it is.
It’s still short of the $1.67 million sought but does provide Promisia with some much-needed working capital.
The amount raised includes the conversion of $800,000 in debt owed to its largest shareholder, director Tom Brankin’s family trust, which also underwrote the issue, but before the underwriting agreement kicks in, said chair Stephen Underwood.
“We’re very pleased with the confidence shown by our shareholders,” Underwood said.
Promisia has been operating with the support of Brankin, whose trust is still owed another $800,000.
The underwriting agreement gave Brankin the option to buy a further $250,000 worth of shares from any shortfall.
Underwood said Brankin now has two weeks to notify the company how many shares his trust will take up.
The root of Promisia’s current difficulties stems from MedSafe’s warning in February last year that the company’s Arthrem supplement, intended to promote joint health, may cause liver damage, a warning repeated in November when MedSafe said that 25 cases of liver toxicity had been reported to the Centre for Adverse Reaction Monitoring by Sept. 30.
Promisia blamed those adverse reactions on much higher-dose competing products or said that it was other drugs or supplements that were causing adverse reactions but, so far at least, its arguments have cut no ice with MedSafe.
A rival product, Go Arthri-Remedy 1-A-Day, was withdrawn from sale after the February alert but Promisia’s product is still sold in about 1,000 New Zealand pharmacies and about 900 pharmacies in Australia.
The Go Arthri-Remedy product contained twice the dosage of Promisia’s product.
“It’s fair to say their (Medsafe's) responses have been unsatisfactory,” Underwood said, adding the regulator has refused to acknowledge the different impacts of Promisia’s lower-dose product compared with its higher-dose competitors.
“It seems to have fallen on deaf ears. We’re still trying to engage with MedSafe on this issue” and the company has enlisted the Natural Products Association.
“This kind of behaviour from MedSafe has an implication for everyone who’s making non-medicine products,” Underwood said.
“We’re trying to be constructive rather than flying off at the lip but it seems to be pretty much a one-way street.”
When BusinessDesk asked MedSafe in early December whether it was likely to order Promisia’s product to be withdrawn, compliance manager Derek Fitzgerald replied in writing but didn’t answer that question.
Medsafe has informed Promisia “on several occasions that its product currently sold as ‘Arthrem’ did not meet regulatory requirements,” Fitzgerald said.
“The company has not informed MedSafe of any action it has taken or intends to take to fully remedy the situation.”
BusinessDesk asked what time-frame MedSafe is looking at but that question was ignored.
The company reported a 64 percent drop in sales for the six months ended June and a net loss of $1.2 million, up from a loss of $349,000 in the previous first half.
Promisia shares last traded at 0.2 cents on Dec. 27, its record low. The shares traded as high as 2.4 cents early last year ahead of MedSafe’s first warning.
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