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Atossa Genetics Inc (ATOS) Cashes Out; Shares Take a Hit

support@smarteranalyst.com (Ben Mahaney)

Shares of breast cancer detection device maker Atossa Genetics Inc (NASDAQ:ATOS) are tumbling nearly 23%, as of this writing. The reason? Atossa announced this morning that it will be selling approximately 5.3 million shares of its own stock to raise cash.

Each share of common stock is being sold together with one Class A warrant and one Class B warrant at a combined effective price of $0.27. The warrants will be exercisable six months following the date of issuance and have an exercise price of $0.315. The warrants cannot be exercised on a cashless basis unless there is no effective registration statement covering the common shares issuable upon exercise of the warrants. The Class A and Class B warrants will expire on the 8-month and 12-month anniversary of the initial issuance date, respectively.

Added to its current 26.52 million shares outstanding, this offering promises to dilute existing shareholders by at least 20% — coincidentally, about the same amount that the stock is down today.

Another reason investors may be selling off Atossa Genetics stock is the price at which these new shares are being offered. At $0.27 a share, the company is offering new stock for a price 13% below what its shares cost prior to the offering announcement.

On the other hand, these new shares won’t just raise the share count but they’ll also raise cash. Atossa expects the sale of these new shares to help shore up its balance sheet by generating as much as $1.4 million in new capital, before deducting the placement agents’ fees and other estimated offering expenses.

The registered direct offering and concurrent private placement is expected to close on or about December 22, 2017, subject to the satisfaction of customary closing conditions.

Atossa Genetics is a clinical-stage pharmaceutical company, which focuses on the development of novel therapeutics and delivery methods for the treatment of breast cancer and other breast conditions. It offers ForeCYTE and ArgusCYTE diagnostic tests. The ForeCYTE Breast Health Test provides personalized information about the 10-year and lifetime risk of breast cancer for women between ages 18 and 65. The ArgusCYTE Breast Health Test offers information to help inform breast cancer treatment options and to help monitor potential recurrence.

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