PLx Pharma's Capital Raise More Dilutive Than Expected, Raymond James Says
PLx Pharma Inc (NASDAQ: PLXP) recently raised $15 million in gross proceeds by issuing convertible preferred stock financing.
The capital raise is significantly more dilutive than was previously anticipated, which indicates that future fundraising for a successful Vazalore launch may be on less favorable terms, according to Raymond James.
The Analyst
Analyst Elliot Wilbur on Monday downgraded PLx Pharma from Outperform to Market Perform.
The Thesis
According to the recent capital raise terms, the shares will be convertible into common shares at a conversion price of $2.60 per share, with a potential stock dividend rate of 8 percent per annum or $1.2 million, Wilbur said in a Monday downgrade note.
The dividend will stop accruing when the FDA approves Vazalore’s sNDA, which is likely to be in mid-2020, the analyst said.
The agreement includes the issuance of warrants that allow participants to purchase 500,000 shares of common stock at a price of $3.50 each. The combined effect of this could add about 6.2 million shares to the current outstanding share count and take the price point 50 percent below what was previously anticipated, Wilbur said.
The initial launch and marketing will require significant funding for shelf space and brand awareness, he said.
Future capital raises will likely not be as favorable given a tightening capital market, Wilbur said.
Raymond James reduced its 2026 Vazalore sales estimate from $206 million to $182 million.
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Latest Ratings for PLXP
Jan 2019 | Raymond James | Downgrades | Outperform | Market Perform |
Mar 2018 | Janney Capital | Downgrades | Buy | Neutral |
Jan 2018 | Janney Capital | Initiates Coverage On | Buy |
View More Analyst Ratings for PLXP
View the Latest Analyst Ratings
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