PuraPharm (HKG:1498) said it secured a license for BN101E from a company controlled by its chief executive Chan Yu Ling, according to a Hong Kong bourse filing Friday.

Shares of the traditional Chinese medicine company jumped over 5% in afternoon trade Monday.

The company agreed to issue HK$40.2 million worth of shares to receive an exclusive license for BN101E which is being developed as an anti-inflammatory botanical drug for the treatment of rheumatoid arthritis.

The 93,488,372 shares that will be issued as payment represent 23.61% of the company's issued share capital and 17.45% on an enlarged basis.

Meanwhile, the company also agreed to issue over 46.5 million shares at HK$0.43 apiece to Providence Capital Group.

The shares represent 11.75% of the company's issued share capital and 8.68% on an enlarged basis.

The company will use the HK$20 million in gross proceeds raised from the sale to advance research of BN101E.

The company plans to call a meeting of shareholders to seek approval for the agreements.