Zelira’s High-Interest R&D Loan Raises Questions on Financial Strategy

Zelira Therapeutics Strengthens Funding with R&D Loan Facility

In a strategic move to bolster its research and development efforts, Zelira Therapeutics (ASX – ZLD) has secured a $650,000 loan facility from Rocking Horse Capital. This non-dilutive financing is backed by the company's anticipated R&D tax incentive rebate for the financial year ending June 30, 2025. The facility is designed to provide Zelira with immediate liquidity to advance its clinical programs and manage working capital needs without issuing new equity.

Supporting the HOPE SPV Clinical Trial

The loan proceeds will primarily support the HOPE SPV clinical trial, a critical component of Zelira’s pipeline. The HOPE SPV, in which Zelira holds a 55% equity stake, is conducting FDA Phase 1 through Phase 3 trials for its proprietary HOPE® 1 product. This trial is pivotal for Zelira’s ambition to bring clinically validated cannabinoid-based medicines to global markets, particularly targeting conditions such as insomnia, autism, and chronic pain.

By securing this funding, Zelira aims to maintain momentum in its clinical validation efforts, which are essential for regulatory approvals and eventual commercialization. The company’s partnership with iNGENū CRO Pty Ltd to manage these trials underscores its commitment to rigorous scientific standards and regulatory compliance.

Loan Terms and Financial Implications

The facility limit of $650,000 represents less than 80% of Zelira’s estimated R&D tax incentive for FY25, based on eligible expenditures through April 2025. The loan carries a relatively high interest rate of 17% per annum, reflecting the specialized nature of this financing. Repayment is due either 21 business days after the Australian Taxation Office issues the R&D tax incentive assessment or by November 30, 2025, whichever comes first.

CEO Dr Oludare Odumosu highlighted the attractiveness of this non-dilutive funding approach, emphasizing its straightforward structure and effectiveness in supporting Zelira’s short-term cash flow without diluting shareholder value.

Broader Commercialization and Pipeline Progress

Beyond the HOPE SPV, Zelira continues to expand its commercial footprint. Its prescription products, including HOPE® formulations, generate revenue across Australia and select US states. The company is also advancing ZENIVOL®, the first clinically validated cannabinoid drug for chronic insomnia, into the German market following regulatory approval. Additionally, Zelira’s OTC product lines, such as the RAF FIVE™ acne treatments and oral care products developed with SprinJeneCBD, contribute to diversified revenue streams.

Innovations like the Enhanced Distillate Capture and Dissolution Matrix (EDCDM) technology under the Zyraydi™ brand signal Zelira’s intent to develop pharmaceutical-grade solid oral dosage forms, potentially opening new commercial opportunities.

Outlook and Strategic Positioning

This loan facility represents a tactical financial maneuver to bridge Zelira’s funding needs as it progresses through costly clinical phases. While the interest cost is notable, the non-dilutive nature preserves shareholder equity at a critical juncture. Investors will be watching closely for clinical milestones and the eventual receipt of the R&D tax incentive rebate, which will trigger loan repayment and potentially unlock further investment capacity.