AcelRx Pharmaceuticals Inc (NASDAQ: ACRX) is tanking heavily in the pre-market hours today, and for good reason. The company announced minutes ago that it plans on moving forward with a public offering. While this type of news generally leads to concern, the declines caused by today’s news may actually be an opportunity. Today, we’ll talk about:
- The news;
- why the declines may be an opportunity;
- what we’re seeing from ACRX stock; and
- what we’ll be watching for ahead.
ACRX Announces Proposed Public Offering
As mentioned above, AcelRx Pharmaceuticals is tumbling in the pre-market after announcing plans to move forward with a public offering. The company said that it expects to grant the underwriters a 30-day option to purchase up to an additional 15% of the amount of shares offered through the transaction. However, the company didn’t quite say how many shares that would be.
ACRX said that the funds generated from the offering will be used to fund the commercial launch of DSUVIA. DSUVIA is the company’s recently approved pain medication.
Why These Declines May Turn Into An Opportunity
No one likes public offerings. After all, they tend to rob investors of value and they show that the company is in need of funding. However, in this case, it makes sense. About a week ago, ACRX announced that the FDA approved DSUVIA.
DSUVIA is an ultra-high potency pain killer. In fact, the opiod drug is 10 times more powerful than Fentanyl and 1,000 times more powerful than morphone. At the end of the day, it is the strongest pain killer on the market today. While this fact will lead to some challenges, it may also lead to sales.
At the end of the day, the reaction to the DSUVIA approval in AcelRx shares hasn’t been all that great. With concerns surrounding the opiod crackdown that we’re seeing in the United States, investors have limited the growth in the stock that would generally come as a result of an FDA approval. Now, today’s news is pushing the stock further down.
Nonetheless, ACRX is working to get their hands on the funding needed for successful commercialization. Should all go well, this stock could fly in the long run, making today’s declines an opportunity to get in on future gains at a discount.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. In the case of ACRX, the news was viewed as negative among the investing communtiy. After all, public offerings often have that effect. Of course, our partners at Trade Ideas were the first to alert us to the declines. Currently (7:19), ACRX is trading at $3.41 per share after a loss of $0.50 per share or 12.79% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on ACRX. In particular, we’re interested in following the story surrounding the launch of DSUVIA. After all, there will be challenges involved in launching the strongest opiod in the world, but there is also the potential for the company to drive meaningful revenue through the treatment. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!