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MannKind Corp. Message Board

  • anitdua anitdua Mar 21, 2013 2:21 AM Flag

    Facts about ATM financing

    Many times, both investors and traders do not understand how offerings work, and automatically assume the stock price will go down. One such vehicle is an at-the-market (ATM) offering. An ATM is an offering of newly issued shares into the existing trading market. It enables the issuer, through the services of a broker-dealer acting as an agent, to sell stock into the market over a period of time determined by the issuer at a minimum price that is also determined by the issuer. If managed effectively by the agent, the shares are sold at the prevailing market price. There is no offering discount. There are no warrants. Unlike a line of credit, the shares are not sold to previously identified parties at a discount to the volume-weighted average price (VWAP), but they are sold at the market price. This results in a lower cost of capital compared to more traditional financing approaches. In addition, an ATM provides the company with more control on the timing of capital-raising. It is complementary with other financing activities, so one could supplement a more traditional financing with an ATM. Therefore, ATMs are tools for companies that are seeking to build solid, long-term financing strategies incorporating several financing vehicles that provide flexibility and reduce the overall cost of capital.In just about every case of a direct ATM offering, the stock normally rises quite a bit. The kind of financing that can be negative on a stock is when a company engages in a private placement, with tons of warrants issued to "private investors." On January 18th, Trius engaged in a public offering at the market (ATM) price of $4.75 a share. Often times, when small cap biotechs "dilute" the share price heads down. This was not the case with Trius, as the stock rallied on the offering to near $5 in a couple of trading sessions and now is close to $7. In May of 2012, Arena Pharma (ARNA) did an ATM at $5.50, soon after te stock zoomed to $12

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