Equillium Inc. (NASDAQ: EQ) announced it entered into a securities purchase agreement with RA Capital Management for approximately $35 million in gross proceeds.

The biotechnology company will issue approximately 18.9 million shares of common stock, including shares underlying pre-funded warrants, at $1.854 per share. The purchase price represents the average closing price of Equillium's common stock for the five trading days prior to the financing.

The company stated it intends to use the net proceeds to advance clinical development of EQ504, for working capital and general corporate purposes. The financing is expected to extend the company's cash runway into 2029 when combined with existing cash and cash equivalents.

"This financing strengthens our balance sheet and supports continued progress of EQ504 through its clinical development plan and is expected to fund company operations into 2029," said Bruce Steel, Chief Executive Officer of Equillium.

EQ504 is an investigational aryl hydrocarbon receptor modulator designed for oral administration to target the colon for treating ulcerative colitis. The company is developing the compound as a potential standalone oral therapy or in combination with other treatments.

LifeSci Capital served as Equillium's financial advisor for the transaction. The securities are being sold in a private placement not registered under the Securities Act of 1933. RA Capital Management received customary resale registration rights for the shares.

Equillium focuses on developing therapies for autoimmune and inflammatory disorders. The La Jolla, California-based company's lead candidate EQ504 is designed with what it describes as a multi-modal, non-immunosuppressive mechanism of action.