InspireMD Inc. (NYSEMKT: NSPR) was down over 30% during pre-market trading, at 9:00 AM EST on March 9, 2017. The stock opened up at $1.35, over 30% below its previous day’s closing price. Traders exchanged over 200K shares during the pre-market by 9:00 AM ET, while its 30-day average daily volume was only 92K. By 9:35 AM ET, the stock traded over 100K shares, excluding pre-market volume).
Here’s a look at NSPR’s performance since the beginning of 2017:
As of March 8, 2016, the stock was down 21.20% YTD and nearly 90% over the past year. The stock has been significantly underperforming the market, and NSPR could fall lower off this news.
InspireMD Announced Pricing of Public Offering Up to $7.5M
InspireMd Inc., InspireMD or the Company, filed a Notice of Effectiveness for a Form S-1. Thereafter, it filed a Form S-1 with the Securities and Exchange Commission (SEC). The SEC declared the Form S-1 effective, on March 8, 2017. Now, the company is intending to offer some securities, but only pursuant to a registration statement on Form S-1. A final prospectus related to the public offering will be filed with the SEC, by March 10, 2017. That in mind, shares are falling off of this headline and here are the details of the public offering.
InspireMD Public Offering Details
The company announced pricing of a “best efforts” public offering of up to 1,171,875 shares of Series C Convertible Preferred Stock, Series B warrants to purchase up to 4,687,500 shares of common stock and Series C warrants to purchase up to 4,687,500 shares of common stock.
That being said, each share of Series C Convertible Preferred Stock is convertible into 4 shares of common stock, at a conversion price equal to $1.60 per share. However, the stock was trading below $1.40 per share at 9:35 AM ET, on March 9, 2017.
The Series B warrants would be exercisable immediately. The Series B warrants have a term of exercise of five years, from the date of issuance and have an exercise price of $2.00 per share of common stock. Additionally, the Series C warrants would also be exercisable immediately. The Series C warrants would have a term of exercise of six months, from the date of issuance and have an exercise price of $1.60 per share of common stock.
InspireMD expects to receive gross proceeds of up to $7.5M through the public offering. Now, those proceeds are before deducting placement agent fees and estimated offering expenses payable by InspireMD. Moreover, the deductions would be assuming completion of the maximum offering.
That in mind, the public offering is expected to close on or around March 14, 2017. The offering is still subject to customary closing conditions.
What’s InspireMD Doing With the Potential Proceeds?
The company currently has a market cap of nearly $1.70M, but it’s looking to raise $7.5M through this offering. According to Yahoo Finance, InspireMD had shares outstanding of only 1.47M and a float of 1.19M. That in mind, the public offering could significantly dilute it shares. This could potentially push it’s stock price lower.
However, InspireMD is looking to use these net proceeds to expand its business. The company is aiming to further fund the expansion of its sales and marketing activities for CGuard EPS and MGuard Prime EPS.
Now, if InspireMD receives sufficient proceeds, from the exercise of the Series C warrants, it aims to continue developing and manufacturing enhancements for CGuard EPS. Moreover, the sufficient proceeds from the exercise of the Series C warrants would allow the company to increase its efforts to obtain an Investigational Device Exemption approval for CGuard EPS.
The Bottom Line
InspireMD was down significantly during the morning trading session due to the announcement of its public offering. The public offering could dilute the company’s shares, which could push its shares lower.