RXi Pharmaceuticals Corp (NASDAQ: RXII) is having an overwhelmingly rough start to the trading session this morning, and for good reason. The company announced that it will be raising funds through a dilutive transaction in a press release early this morning. Of course, the news upset investors, sending the stock tumbling down. Today, we’ll talk about:
- The transaction;
- what we’re seeing from RXII stock as a result; and
- what we’ll be watching for ahead.
RXII Falls Hard On Dilutive Transaction
As mentioned above, RXi Pharmaceuticals is having an incredibly rough start to the trading session this morning after announcing a dilutive transaction. In a press release issued early this morning, the company said that it has priced an underwritten public offering of 21,428,572 units at a price of $0.70 per unit. RXII said that each unit will consist of one share of common stock and one warrant to purchase one share of common stock.
The warrants included in the offering will have an exercise price of $0.70 per share and will be exercisable immediately and for a period of seven years from the date of issuance. While the shares and warrants will be purchased together as a single unit, they will be issued separately and will be immediately separable upon issuance.
In the release, RXII said that it is expecting to raise $15 million from the offering before underwriting discounts, commissions, and other expenses associated with the transaction. The company will use the net proceeds of the offering to fund the development of its immuno-oncology program, other R&D costs and general working capital.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of RXi Pharmaceuticals, the news was anything but positive. After all, the transaction dilutes shares, taking value from current shareholders in the stock immediately upon closing. So, it comes as no surprise that upset investors are pushing the stock toward the bottom. At the moment (10:42), RXII is trading at $0.60 per share after a loss of $0.57 per share or 48.38% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to follow the story surrounding RXII incredibly closely. In particular, we’re interested in following this transaction as it is still subject to customary closing conditions. We’re also interested in following the company’s continued work to develop its immuno-oncology program. With the additional funds, this program development could reach the next level. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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