AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) announced that it intends to raise $7,560,000 in gross proceeds in a registered direct offering to a single healthcare dedicated institutional investor in the United States consisting of an aggregate of 2,100,000 units. Each Unit consists of one common share and 0.45 of a warrant to purchase one common share, at a purchase price of $3.60 per Unit, a 14% downside from yesterday’s closing price.
The warrants will have an exercise price of US$4.70 per share. They will be exercisable six months after their date of issuance and will expire three years after their date of issuance. The warrants do not contain any price or other adjustment provision, except for customary adjustment provisions that apply in the event of certain corporate events or transactions that affect all outstanding common shares. The warrants may at any time be exercised on a “net” or “cashless” basis in accordance with a customary formula. In addition, in the event the volume weighted average price of the Company’s common shares on the NASDAQ Capital Market attains or exceeds US$10.00 during 10 consecutive trading days, the Company will have the right to call for cancellation all or any portion of the warrants which are not exercised by holders within 10 trading days following receipt of a call notice from the Company. The warrants will not be listed on any stock exchange.
In addition, if the investor’s purchase of Units in the Offering would result in it beneficially owning more than the initial beneficial ownership limitation to be included in the warrants following the consummation of the Offering, the investor will have the opportunity to acquire Units with pre-funded warrants substituted for any common shares it would have otherwise acquired over the initial beneficial ownership limitation, paying the same price of US$3.60 per Unit.
The public offering would dilute shareholders’ investments, and as such AEZS shares are currently dropping nearly 10% to $3.75 in pre-market trading. AEZS has a 1-year high of $15.70 and a 1-year low of $2.60. The stock’s 50-day moving average is $3.58 and its 200-day moving average is $3.57.
On the ratings front, AEZS has been the subject of a number of recent research reports. In a report issued on August 22, Canaccord Genuity analyst Neil Maruoka reiterated a Buy rating on AEZS, with a price target of $9.00, which represents a potential upside of 115% from where the stock is currently trading. Separately, on August 11, H.C. Wainwright’s Swayampakula Ramakanth reiterated a Buy rating on the stock .
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Neil Maruoka and Swayampakula Ramakanth have a yearly average loss of 41.2% and 18.9% respectively. Maruoka has a success rate of 13% and is ranked #4057 out of 4188 analysts, while Ramakanth has a success rate of 26% and is ranked #4036.
Ãterna Zentaris, Inc. operates as a specialty biopharmaceutical company that is engaged in developing and commercializing novel treatments in oncology, endocrinology and women’s health. The company’s pipeline encompasses compounds at all stages of development, from drug discovery through to marketed products. It focuses on the development of Perifosine, Cetrotide, Ozarelix, AEZS-108 and AEZS-130.