Arthritis remedy firm looks for emergency cash
The company behind herbal-based arthritis remedy Arthrem is facing financial difficulties, after a Medsafe alert on the product earlier this year.
NZX-listed Promisia Integrative said it could fail if shareholders did not approve a rights issue which would refinance the company.
The Wellington-based company will hold a special shareholders meeting on December 4 to seek their approval.
Promisia has suffered a big fall in sales since Medsafe, a division of the Health Ministry, published an alert in February that the dietary supplement was a potential risk to the liver.
The company, which said the risk was rare, cut its advertising budget to conserve cash, but its recovery has been slow.
It told shareholders it had only been able to survive the year through the financial support of interests linked to one of its directors, Tom Brankin.
Promisia is now proposing a rights issue so it can release two new products which were ready prior to the Medsafe alert.
The rights issue would seek to raise $1.67 million. If the deal did not go ahead, the company said it would need to ‘‘look urgently for other sources of new capital or debt’’. If that failed, it could face ‘‘an insolvency event’’.
Rene de Wit, the chief executive, said the company disputed the Medsafe findings, arguing the ministry body had made fundamental errors about how it evaluated information from the Centre for Adverse Reactions Monitoring.
The University of Otago had done a full clinical study on Arthrem before it went to market, de Wit said.