This was a very positive move despite the pain to current shareholders. The stock was down 12% this week, bad but not catastrophic. The company picked up a hoard of cash and will be able to both have the freedom to fund trials and will also be in a position to only do a deal that is very favorable, not because they need the cash.
The low of $13.66 was still 14% above the offering price and the stock is a screaming buy here. I think there was some shorting by the institutions getting a piece of the offering. Short the stock in the high $13's or low $14's and then cover with the $12 shares you'll get from the company.
It's a couple of bucks a share of free money. Hopefully some of the brokers will do their part in the unspoken bargain and write a good report and stick a buy rating on the stock. A couple of the underwriters don't currently cover the stock.
If you have the funds I suggest taking advantage of these screaming buy prices and realize what happened is the company just got a lot stronger. This was an offensive offering to help ensure long term value, not a defensive offering because they needed the cash.
marcpw, I agree with you. I look forward to hearing the news of what the company will do with these funds to move 427 into Phase III. I am not interested in any more Phase II tests, lets get this incredible asset into Phase III now. That will be a healing balm for the pain of dilution.
re "any explanation regarding the $12 price. Twelve Bucks is > 20% discount to the 200 day ema."
My assumption is they just wanted a clean quick deal that didn't leave any ongoing obligations like warrants. Basically in return for letting them buy the shares for such a cheap price they were giving no other enticement. Grab your cash and go and hopefully the deal also helps solve the problem of the stock being very unknown and below the radar screen. One or two of these firms giving a positive analyst report is likely to pop the stock anyway. So I think the price just reflects what they found they needed to offer to get a quick clean deal with no other downside but hopefully some positive analyst reports will come out on the upside. I don't know if they thought it out this far but also with no warrants any arbitrage shorting of the stock should end when the offering is complete