NEW YORK (AP) -- Shares of Ampio Pharmaceuticals Inc. slid in premarket trading Friday after the biopharmaceutical company priced an offering of more than 4.6 million shares of its stock at $3.35 per share, an 8.5 percent discount to their most recent closing price.
Its shares dropped 46 cents, or 12.6 percent, to $3.20 in premarket trading.
It is not uncommon for a company's stock to fall after it announces a stock offering. In addition to the price discount being offered, the dilution of existing shareholder value can scare off many investors.
Ampio, which is based in Greenwood Village, Colo., is currently conducting clinical trials on inflammation drug Ampion, eye drug Optina, premature ejaculation treatment Zertane and Zertane-ED. The company is also looking at licensing distribution of the drugs.
Earlier this month Ampio said that its CEO and Chairman Michael Macaluso and its Chief Scientific Officer and founder David Bar-Or had extended an agreement against selling their Ampio shares until January 2013.
Macaluso also sought at that time to defuse expectations that a large block of Ampio shares held by former shareholders of DMI Biosciences Inc., acquired in 2010, would be traded with the recent expiration of a June 30 lockup date.
DMI Biosciences shareholders obtained Ampio stock in the buyout deal.
On Friday, Ampio said that it expects $15 million in gross proceeds from the public offering of almost 4.62 million shares before expenses are deducted. Ampio shares had closed at $3.66 on Thursday.
The company and certain selling stockholders are giving the underwriters a 45-day option to buy up to an additional 692,310 shares to cover any excess demand.
In a filing with the Securities and Exchange Commission, Ampio said that it plans to use the offering's net proceeds for general corporate purposes. This includes performing pivotal trials for Ampion and Zertane, phase II and phase III trials for Optina, pre-IND development for methylphenidates and general working capital.
The offering is expected to close on Wednesday.