Please ensure Javascript is enabled for purposes of website accessibility

Why Celator Pharmaceuticals Is Soaring (Again) Today

By Todd Campbell - Mar 23, 2016 at 12:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company plans to raise $38 million via a stock offering.


What: After announcing it will tap equity markets for financing to sure up its balance sheet, shares in Celator Pharmaceuticals, (NASDAQ: CPXX) are rallying 19.08% at 12:00 p.m. EST Wednesday.

CPXX Chart

CPXX data by YCharts

So what: That was fast! After reporting full year results on March 21 showing that its cash on hand was around $32 million, Celator Pharmaceuticals has announced that it has priced an offering of 4 million shares at $9.50 per share.

When all is said and done, management expects that it will pocket $38 million before fees.

The offering dilutes investors, however, it also firms up the company's finances ahead of a potential regulatory approval of its first commercial drug next year.

After demonstrating increased efficacy and similar safety in trials, Celator Pharmaceuticals expects to file for FDA approval of its reformulation of the commonly used chemotherapy drugs cytarabine and daunorubicin in the third quarter of this year. A filing for approval in the EU is expected in Q1 2017, too.

Now what: Celator Pharmaceuticals was already expecting its cash on hand to get it halfway through 2017, but given its timeline suggests a launch of its drug -- it will be sold under the brand name Vyxeos -- around the same time, I speculated earlier this week that it would need to raise additional money.

By offering shares to the public now, management takes advantage of a massive uptick in its share price following the release of its positive clinical data. Doing the offering now also removes a potential overhang of uncertainty that might have kept investors uneasy.

Assuming this offering gives the company enough financial firepower to launch Vyxeos, thereby removing the need for further dilutive offerings, investors might want to consider picking a spot to buy. After all, cytarabine and daunorubicin have been a standard of care in AML patients for 30 years and Celator's ability to improve upon them suggests that Vyxeos could be a top seller.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.