Shares of biotech companies Aytu BioScience Inc (NASDAQ:AYTU), Histogenics Corp (NASDAQ:HSGX) and KenPharm Inc (NASDAQ:KMPH) all slid on Friday because of heavily discounted share offerings which investors greeted as diluting company shareholdings and causing losses to investors.
KenPharm offered 8.33 million shares that represent 52% of its outstanding shares. Those stocks were priced at $3, nearly a 30% discount to the Thursday closing price of $4.18.
Aytu offered 457,007 shares of its common stock, 8.34 million shares of preferred stock which are convertible into 8.34 million shares of common stock at a conversion price of $1.50/share, and warrants to buy an additional 8 million shares of common stock at an exercise price of $1.50. Aytu had finished on Thursday at $2.02.
Histogenics announced the pricing of its underwritten public offering of 26.155 million shares and warrants for 19.61 million shares at a combined price of US$0.65, some 35% below the Thursday closing price of $1.
Share offerings by biotech companies are used to raise funds for their operations because the drugs they are developing are undergoing expensive trials and they are not earning any revenue at this time.
READ: Histogenics shares lose nearly three-fourths of their value after Phase 3 trial on knee damage treatment fails
All three stocks posted the biggest losses on NASDAQ for the day, with Aytu and KenPharm both falling to their lowest levels in a year.
KenPharm stock sank more than 36% to a 52-week low of $2.66. Aytu shares also slid to a 52-week low of $1.28, also 36% lower for the session. Histogenics tumbled 46% to US$0.54.
KemPharm is a specialty pharmaceutical company focused on the discovery and development of proprietary prodrugs to treat serious medical conditions through its proprietary LATTM (Ligand Activated Therapy) platform technology. The company is based in Coralville, Iowa.
Aytu BioScience is a commercial-stage specialty pharmaceutical company focused on the commercialization of products addressing significant medical needs. The company currently markets Natesto, the only FDA-approved nasal formulation of testosterone for men with hypogonadism. The company is based in Englewood, Colorado.
Histogenics is a company that develops restorative cell therapies that may offer rapid-onset pain relief and restored function. Company headquarters are in Waltham, Massachusetts.