Moleculin Biotech (NASDAQ:MBRX), which is involved in the manufacturing of a range of cancer drugs meant for particularly damaging tumours, went through a bit of a rollercoaster at the beginning of the week. The company has produced a variety of drugs which are meant for the clinical stages of conditions like brain tumours, pancreatic cancer and others. On Monday, the stock reached new heights after the company announced a major breakthrough for the treatment of lung cancer, but on the very next day, it nosedived following a direct equity offering.
The Rise
On Monday, the Houston, Texas based pharmaceutical company released a press release in which it announced that it had made a significant discovery as regards to a drug related to treatment of lung cancer. Needless to say, such an announcement created a flutter in the markets and investors soon piled in as the stock soared by as much as 180% in Monday’s intraday session to reach three-year high of $3.15. By the end of the session, the stock finally closed at 2.98, up 169%. For any pharmaceutical company which is engaged in this particular line of drugs, the announcement was of huge significance and the broader market thought so as well, as the stock went on an almighty rally.
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The Fall
However, the rally did not last long as the next day Moleculin Biotech announced a direct equity offering to institutional investors in order to raise money for research and development, clinical trials, corporate necessities and other sundry expenses. The company offered 9,375,000 units of its common stock at $1.60 to the institutional investors and raised a total of $15 million through this manoeuvre.
The offering is an attractive one for institutions. In addition to the stock, the institution will also get one half of a warrant that would allow it to buy a share for $1.75. The warrant is valid for 5 years and the offering is going to close on the 25th of April. Such an offering did not seem to amuse the market much and the stock tanked 51% after having gone up by about 170% the previous day.
Shares of MBRX are down another 18% to $1.42 in Thursday’s session.
