so with the stock ending up red on approval - what happened here ? some explanations
ok, here we go:
it doesn't really matter if there are any restrictions to the newly issed shares and warrants - especially institutional investors have ample ways to pocket their gains without violating securities laws.
in this case the easiest way to hedge gains on my recently acquired but still restricted $2 stocks and warrants would be a short sale of the corresponding amount of shares.
As of today I own one 10,000 restricted units consisting of 10,000 preferred series A shares and 10,000 warrants exercisable at $2. With the drug finally approved but the path to market not quite clear I would like to pocket my gains with the stock trading around $3.50. As I am not able to sell into the market I instead engage in a short sale of 20,000 shares. As a result I pocketed a 30,000 dollar gain (less borrowing costs) quite legally. When the restrictions on my units are finally lifted I will exercise the warrants and convert the preferred into common stock and finally deliver the 20,000 shares to the borrower. End of story.
Next you might want to point out that shares aren't available for short sale or at least difficult to borrow. What might apply to the retail investor doesn't apply to institutionals and even I was able to borrow the stock this morning for a healthy short sale.
Yor may also use a derivative strategy to hedge your gains (e.g. buying puts), so there are really no problems to "legally sell" officially restricted stock here.
As you might have observed the selling pressure is for real and won't stop going forward - this is not caused by the "old" stockholders which likely sit on sizeable losses anyway and won't sell at all here, no matter if the stock trades at $3 or $4.
The pressure is caused by the participants in the recent financing especially Safeguard Scientifics which owns a whopping 18.2% share in PATH. Owned I guess.