Innovation Pharmaceuticals Inc. will receive up to $10 million to fund drug development through an agreement with a healthcare and life sciences investor.

The financing will be conducted through the issuance of preferred stock convertible to Innovation Pharmaceuticals' class A common stock and warrants in a registered direct offering. The transaction will have no underwriter or placement agent, the Beverly, Mass.-based company said.

The first tranche of the offering is expected to close Oct. 9.

Innovation Pharmaceuticals will use the funds to further develop its drug candidates: brilacidin for oral mucositis, or mouth sores, a common complication of cancer treatments; kevetrin for ovarian cancer; and prurisol for psoriasis, an autoimmune disease that causes raised, red, scaly patches to appear on the skin.

"This new financing serves to further bolster our balance sheet and gives us flexibility in working to meet our near-term goals, which includes advancing brilacidin into a pivotal study," CEO Leo Ehrlich said.