PURE Bioscience Boosts Balance Sheet by New Financing - Analyst Blog

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PURE Bioscience Boosts Balance Sheet by New Financing

Grang Zeng, CFA

Early today, PURE Bioscience, Inc. ( PURE ) announced the pricing of an underwritten public offering of 3,784,000 shares of its common stock, offered at a price to the public of $1.10 per share.

The gross proceeds to PURE from this offering are expected to be $4,162,400, before deducting the underwriting discount and other estimated offering expenses payable by PURE. PURE has granted the underwriters a 45-day option to purchase at the public offering price up to an aggregate of 567,600 additional shares of common stock to cover overallotments, if any. The offering is expected to close on or about September 17, 2012, subject to customary closing conditions.

The offering is being made pursuant to a shelf registration statement that PURE filed with the SEC and is effective.

While some investors view this offering negative, but we see this financing positive in the long run.

This offering will boost the Company's balance sheet immediately. As we pointed out before, cash burn is our chief concern. As of April 30, 2012, the Company had cash and cash equivalents of approximately $0.3 million. With proceeds from this offering, the Company should have cash on hand of approximately $4 million, which will last through the end of 2012.  

Recently, PURE reported strong financial results for its third fiscal quarter ended April 30, 2012.

Revenue for the quarter was $207,000, compared with revenue of $128,000 for the same quarter of the prior year, an increase of 61.2%.

Gross margin as a percentage of net product sales was 82% and 71% for the three months ended April 30, 2012 and 2011, respectively. Going forward, we believe PURE can maintain a gross margin of 75-80% depending on product mix it markets. This is pretty impressive.

The net loss for the quarter was $1.8 million, or $0.04 per share, compared with a net loss of $1.8 million, or $0.05 per share, in the third quarter last year.

Revenue for the nine months ended April 30, 2012 was $685,000, compared with revenue of $220,000 for the nine months ended April 30, 2011. The net loss for the nine months ended April 30, 2012 was $6.4 million, or $0.15 per share, compared with a net loss of $6.3 million, or $0.17 per share, for the nine months ended April 30, 2011.

With the balance sheet boosted, PURE is in a better position to execute its long term growth strategy.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

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