Specialist producer of pharmaceutical and medical devices for
Delcath Systems Inc.
) recently announced the pricing of an underwritten public offering
of 13,333,340 shares of its common stock at $1.50 a share.
The company also priced warrants that entitle holders to
purchase up to 4,000,002 shares at an exercise price of $1.65 a
share. The offering will generate gross proceeds of $20
After the deduction of underwriters' discounts and estimated
offering expenses, this offering will generate net proceeds of
about $18.4 million. This excludes any potential cash proceeds by
the exercise of the warrants. In a bid to cover over-allotment, the
company has also allowed underwriters a 30-day option to purchase
an additional 15% of shares of its common stock and warrants.
This is expected to generate gross proceeds of $3 million, if
exercised in full. The offering is expected to close on or about
May 31, 2012.
Delcath plans to use the proceeds for commercialization of new
products, attaining regulatory approvals and to sponsor the
clinical trials. The company is on the verge of pitching into a
multi-billion dollar global market.
Delcath recently envisaged a commercialization strategy for the
European market. It has also submitted applications for regulatory
approvals for its products in Hong Kong, South Korea and Singapore
and plans to submit the same in India, Russia, China, Canada and
Japan. The proceeds will enable the company to focus on its growth
strategy in the international market.
The public offering will enable the company to meet its current
capital needs. As of March 31, 2012, Delcath Systems' cash
position stood at $20.8 million, down 47% year over year.
Management believes that its business has not generated sufficient
positive cash from operating activities.
It has always operated at a loss since inception and constantly
faces liquidity crises. During its first quarter earnings
conference call, the company revealed a plan to raise additional
capital to fund its development efforts and this public offering is
an execution of its earlier plan.
The joint book-running managers for this offering are Cowen and
Company, a wing of
) and Wedbush PacGrow Life Sciences. Roth Capital Partners is
acting as co-manager.
Delcath is a provider of oncology solutions. Its business
profile includes development and manufacture of pharmaceuticals and
medical devices for cancer therapy.
The concern about Delcath profitability still overhangs and the
company remains vulnerable compared to its competitors including
The stock currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating.
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