Zynerba Pharmaceuticals Inc (NASDAQ: ZYNE) is having an incredibly rough start to the trading session this morning, and for good reason. The company announced that it intends to offer shares to the public, leading to fear of dilution among investors. Today, we’ll talk about:
- The offering;
- what we’re seeing from ZYNE as a result; and
- what we’ll be watching for ahead.
ZYNE Announces Intent To Launch A Public Offering
As mentioned above, Zynerba Pharmaceuticals is having an incredibly rough start to the trading session this morning after the company announced offering news. In a press release issued early this morning, the company announced that it intends to offer and sell shares of its common stock in an underwritten public offering.
In the release, ZYNE said that the offering is subjet to market conditions and there can be no assurance as to whether or when the offering may be completed, or the actual size and terms of the offering. Nonetheless, the company intends to grand the underwriters at 30-day option to purchase up to an additional 15% of the shares of common stock offered in the public offering.
In the release, ZYNE said that it intends to use the net proceeds of the proposed offering to support the clinical development of ZYN002m, for additional research and development, and for general corporate purposes, which may include capital expenditures and funding working capital needs.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In the case of Zynerba Pharmaceuticals, the news proved to be negative. While investors know that in the clinical stages, public offerings are often a necessary evil, these offerings lead to dilution, which is just about always a source of concern for investors. So, it’s no surprse to see that the stock is tumbling in the market today. Of course, our partners at Trade Ideas were the first to alert us to the declines. Currently (8:39), ZYNE is trading at $8.14 per share after a loss of $2.28 per share or 21.88% 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 ZYNE. In particular, we’re interested in following the news to see when the offering takes place and what the terms of the offering will be. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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