Celsion Corporation (NASDAQ: CLSN) shares were up over 7% today, after the company announced that it cancelled its registered direct offering of common stock. That said, this action would not dilute the stock, removing some potential risk in the stock price. Now, let’s get right into the news that sent CLSN higher.
Celsion Announced $5.4M Registered Direct Offering Earlier This Week
On June 19, 2017, Celsion Corp announced that it entered into definitive agreements with multiple institutional investors to purchase a total of $5.4M worth of shares of the company’s common stock, or pre-funded warrants. The company agreed to sell a total of around 2M shares of common stock, or pre-funded warrants, at $2.75 per common share or warrant share.
According to the company’s SEC Form 8-K, “The investors will receive, for each share of common stock or pre-funded warrant purchased in the registered direct offering, a Series AAA warrant to purchase one (1) share of common stock and a Series BBB warrant to purchase one (1) share of common stock. The Series AAA warrants have an exercise price of $2.75 per share, are initially exercisable six months following issuance, and terminate five and one-half years following issuance. The Series BBB warrants have an exercise price of $8.00 per share, are immediately exercisable, and terminate one year following issuance. The closing of this offering is expected to take place on or about June 22, 2017, subject to the satisfaction of customary closing conditions.”
As of May 31, 2017, CLSN had shares outstanding of 4.07M, 3.93M shares floating and 490K shares short. Consequently, if this registered direct offering did go through, shares of its common stock would have been significantly diluted.
Now, this announcement caused the stock to gap down, and shares opened up at $2.36 today, below the expected offering price per share.
Here’s a look at the performance after this announcement.
However, as stated earlier, the company announced that it cancelled the registered direct offering, which sent shares higher.
Celsion Cancels Registered Direct Offering
Three days after the registered direct offering announcement, Celsion announced that it cancelled the registered direct offering of common stock announced. The company noted that after careful review, it did not have the ability to register a sufficient number of shares pursuant to the company’s SEC Form S-3 filing until July 1, 2017.
Consequently, Celsion’s Board of Directors agreed to cancel the offering. Additionally, CLSN entered into an agreement with each of the institutional investors to terminate the offering. Not only that, but the company also entered into agreements with some of the institutional investors, “which include the right for such investors to participate in a single offering or multiple offerings of securities by which Celsion offers in such offering(s) at least $2,000,000 of securities on terms no less favorable than the cancelled transaction, a make-whole provision in respect of losses incurred by such investors in respect of the cancelled transaction, a most favored nation clause with respect to agreements entered into by the other investors, and an offer to reprice certain warrants held by such investors.”
Here’s what happened with the stock after the announcement.
The Bottom Line
When a company files for a registered direct offering, the stock tends to fall due to the potential dilution. However, if it cancels that registered direct offering, it would remove some overhang of risk, which should send the stock up. This was the case with CLSN, causing the stock to finish up over 7% on the day.