After flying in the market yesterday due to a grant announcement, Pain Therapeutics, Inc. (NASDAQ: PTIE) is seeing dramatic declines in the market this morning. The declines are ultimately the result of news surrounding a dilutive offering. Of course, investors never respond well to dilution. Today, we’ll talk about:
- The offering;
- what we’re seeing from PTIE as a result; and
- what we’ll be watching for ahead.
PTIE Announces Offering
As mentioned above, Pain Therapeutics is having an incredibly rough start to the trading session in the pre-market hours this morning after announcing an offering. In a press release, the company announced that it has entered into multiple definitive agreements with institutional investors surrounding the purchase of 8,869,778 shares of common stock. PTIE said that the deal will take place at a price per share of $1.15, generating gross proceeds in the amount of $10.19.
Also, PTIE announced that it has also agreed to issue unregistered warrants to the investors. These warrants surround the purchase of up to 8,860,778 shares of common stock at a price per warrant of $0.125, bringing in gross proceeds of $1.11 million. These warrants have an exercise price of $1.25 per share of common stock. The company said that it expects that the deal will close on or about August 17, 2018. Finally, the comapny intends to use the net proceeds from this offering for drug development, general corporate purposes, and other working capital purposes.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dive into the market is that the news leads to moves. In the case of Pain Therapeutics, the news proved to be a hit to the gut of investors. After all, the dilution associated with this deal is hard to take for many. So, it comes as no surprise that upset investors are reacting by sending the stock tumbling. Of course, our partners at Trade Ideas were the first to alert us to the declines. Currently (7:55), PTIE is trading at $1.10 per share after a loss of $0.86 per share or 43.88% 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 PTIE. In particular, we’re interested in following the story surrounding the company’s use of the funds generated through this offering as well as the upcoming Alzheimer’s disease study. Nonetheless, we’ll continue to follow the news closely and bring it to you as it breaks!
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