Synthetic Biologics Inc (NYSEMKT:SYN) announced that it intends to offer and sell, subject to market and other conditions, 25,000,000 shares of its common stock and warrants to purchase 50,000,000 shares of its common stock at a price to the public of $1.00 per share and accompanying warrants, discount of 31% to yesterday’s closing price.
The public offering would dilute shareholders’ investments, and as such Synthetic Biologics shares are currently dropping nearly 37% in early trading.
The gross proceeds to Synthetic Biologics from the offering, excluding the proceeds, if any from the exercise of the warrants, before deducting underwriting discounts and commissions and other offering expenses, are expected to be approximately $25.0 million. If exercised in full, the warrants could result in additional net financing proceeds to the Company of $78.8 million. The Underwriter has a 30-day option to purchase up to 3,750,000 additional shares of common stock and warrants to purchase up to 7,500,000 additional shares of common stock. The offering is expected to close on or about November 18, 2016, subject to customary closing conditions.
The initial per share exercise price of the Series A warrant is $1.43 per share and the per share exercise price of the Series B warrant is $1.72 per share, each subject to adjustment as specified in the warrants. The Series A and Series B warrants may be exercised at any time on or after the date of issuance. The Series A warrants shall not be exercisable after and shall terminate and become void on the four-year anniversary following the date of original issuance. The Series B warrants shall not be exercisable after and shall terminate and become void on December 31, 2017. (Original Source)
On the ratings front, Synthetic Biologics has been the subject of a number of recent research reports. In a report issued on August 31, Griffin Securities analyst Keith Markey reiterated a Buy rating on SYN, with a price target of $5.75, which implies an upside of 302% from current levels. Separately, on August 2, FBR’s Edward White 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, Keith Markey and Edward White have a yearly average loss of 26.4% and a return of 2.7% respectively. Markey has a success rate of 23% and is ranked #4070 out of 4214 analysts, while White has a success rate of 38% and is ranked #1213.
Synthetic Biologics, Inc. is a clinical stage company, which develops therapeutics to protect the gut microbiome while targeting pathogen-specific diseases. Its products portfolio includes SYN-004 and SYN-010. The SYN-004, which is designed to protect the gut microbiome from the effects of certain commonly used intravenous (IV) antibiotics for the prevention of C. difficile infection and antibiotic-associated diarrhea. The SYN-010, which is intended to reduce the impact of methane-producing organisms in the gut microbiome to treat an underlying cause of irritable bowel syndrome with constipation.