CASI Pharmaceuticals (NASDAQ:CASI) was down by roughly 15% in late trading on Wednesday, against the more or less flat performance of the S&P 500 index. The catalyst is the company's pricing of a relatively large and dilutive public issue of new stock.
CASI announced Wednesday morning that it is issuing just under 15.9 million shares of its common stock at a price of $2.05 per share. The issue's underwriters have also collectively been granted an option to buy nearly 2.4 million additional shares.
The issue should bring in total gross proceeds of roughly $32.5 million. The company expects it to close on or around this Friday, March 26.
CASI said it will utilize the monies "for working capital and general corporate purposes." Among these potential uses are acquiring the rights to new products and general and administrative expenditures.
Product rights are important to CASI, since the core of its business strategy is to sell existing medications to the massive Chinese market.
While CASI has an intriguing and offbeat business model for a pharmaceutical company, it hasn't been successful. The company's net losses are deep, approaching nearly $17 million in the most recently reported quarter. The top line has been improving, but not enough to soothe worries about the viability of that model.
Meanwhile, the new share issue is dilutive. According to Yahoo! Finance, CASI has nearly 124 million shares outstanding; the freshly minted ones will dilute this by at least 13%.