Delcath Systems, Inc. (NASDAQ: DCTH) isn’t having the best of days in the market today after releasing an 8K surrounding Series B financing. Unfortunately, the 8K led to concerns, causing fear among investors and sending the stock downward. As is normally the case, our partners at Trade Ideas were the first to alert us to the declines. At the moment (9:45), DCTH is trading at $0.17 per share after a loss of $0.02 per share or 8.68% thus far today.
DCTH Announces Series B Financing
As mentioned above, Delcath Systems released an 8K today informing investors of Series B financing. Through this financing, DCTH will raise $2 million in gross proceeds. According to the 8K, the new Series B Preferred Stock comes with no dividend, liquidation, or other rights. However, they can be converted into shares of common stock at a price equal to $0.1530 per share upon the earlier of the date of closing to the extent that the holder reallocates shares of common stock reserved for issuance under its certain senior secured convertible notes to conversions of the Series B Preferred Stock.
In the 8K, DCTH said that it has entered into a Securities Purchase agreement with certain institutional investors for the sale of 2,360 shares of Series B Preferred stock at a price of $1,000 per share. The company intends to use the proceeds from the transaction for general corporate purposes.
The 8K also mentioned that the company will soon be seeking approval for a reverse split of shares. Ultimately, the goal of this split will be to increase the price of shares to more than $1.00. This is a requirement to remain listed on the NASDAQ.
Why I’m Not Concerned
At the end of the day, any offering can lead to dilution, which proves to be concerning for investors. However, in this particular case, I’m far from concerned about DCTH. The reason is relatively simple. Ultimately, the company is doing incredible work with Chemosat®. I’m not going to dive too deep into Chemosat here as I’ve covered the topic in great detail in the past. Nonetheless, the treatment is already approved in Europe and showing incredible promise for approval in the United States.
Considering the high value asset that Chemosat will likely prove to be in the long run, the value proposition here is absolutely incredible. As a result, it’s likely that today’s dip in value is nothing more than a buying opportunity.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on DCTH. In particular, we’re interested in continuing to follow the company through bringing Chemosat to the global market. Considering the data surrounding the treatment, it could be the goose that lays the golden eggs relatively soon. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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