Atossa intends to raise $4.0m (gross proceeds), excluding over-allotments, in an equity offering of Class A and Class B units, consisting of 0.664m common shares (CS), 3,502 Series A convertible preferred shares (SACPS), and 5.33m common share warrants (CSW). The offering is expected to close on 3 April, subject to customary closing conditions, and we estimate that it will enable Atossa to fund its operations into Q417.
Written by
Atossa Genetics |
Atossa to raise $4.0m in combined class offering |
Equity offering |
Pharma and biotech |
30 March 2017 |
Share price performance
Business description
Analysts
Atossa Genetics is a research client of Edison Investment Research Limited |
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Atossa intends to raise $4.0m (gross proceeds), excluding over-allotments, in an equity offering of Class A and Class B units, consisting of 0.664m common shares (CS), 3,502 Series A convertible preferred shares (SACPS), and 5.33m common share warrants (CSW). The offering is expected to close on 3 April, subject to customary closing conditions, and we estimate that it will enable Atossa to fund its operations into Q417.
Year |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
0.0 |
(7.3) |
(4.57) |
0.0 |
N/A |
N/A |
12/15 |
0.0 |
(9.8) |
(5.15) |
0.0 |
N/A |
N/A |
12/16 |
0.0 |
(7.2) |
(2.46) |
0.0 |
N/A |
N/A |
12/17e |
0.0 |
(14.2) |
(3.57) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments
Atossa announced on 29 March that it has priced an underwritten public equity offering with expected gross proceeds of $4.0m. The offering consists of Class A units (comprising 0.664m CS and 0.664m CSW) and Class B units (comprising 3,502 SACPS of $1,000 face value, each convertible into 1,333.33 CS, and 4.67m CSW). The CSW all have an exercise price of $0.9375 and a five-year duration. Assuming full conversion of the SACPS (to 4.67m CS), but without considering any CSW exercise, this offering would increase CS outstanding by 141%, to 9.12m. This calculation also excludes the underwriter’s option to purchase an additional 0.8m of CS and CSW to cover any over-allotments.
The proposed funding could shore up Atossa’s balance sheet, given it had disclosed on 16 March that it only had two to four months of cash resources at the time. Atossa’s 2016 operating cash burn rate was $5.37m, although we anticipate a higher burn rate in 2017 given that in March Atossa started a 48-patient Phase I study for endoxifen (and plans to start a Phase II in H217), and enrolment is continuing in the ongoing Phase II study of intraductal microcatheter-delivered fulvestrant. Given its $3.1m year-end 2016 net cash position and the announced financing, we expect Atossa’s cash on hand following the offering to last into Q417.
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Disclaimer
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Disclaimer
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2016 was an important year for 4SC as it launched its potentially pivotal Phase II study with resminostat, an epigenetic cancer drug, in CTCL. In addition, it announced positive subgroup analysis of a Phase II study in HCC with its partner Yakult. It is streamlining its focus on three core assets: resminostat, 4SC-202 (initiating Phase II trials in 2017) and 4SC-208 (initiating preclinical development). We have slightly increased our rNPV to €124m, but note that we forecast a cash horizon to end 2017/early 2018.