XTL Biopharmaceuticals Ltd (ADR) (NASDAQ:XTLB) investors are having a rough day, after the company announced that it has entered into definitive agreements with institutional investors to receive gross proceeds of $2.5 million.

The public offering would dilute shareholders’ investments, and as such XTLB shares are currently dropping nearly 38% to $2.23 in Friday’s trading session. XTLB has a 1-year high of $7.85 and a 1-year low of $2.55. The stock’s 50-day moving average is $1.00 and its 200-day moving average is $0.92.

In connection with the offering, the Company will issue 1,000,000 registered American Depository Shares (ADSs) at a purchase price of $2.50 per ADS in a registered direct offering. Additionally, for each ADS purchased by investors, the investors will receive an unregistered warrant to purchase one ADS. The warrants have an exercise price of $4.10 per ADS, shall be exercisable six months following the issuance date and will expire five and one-half years from the issuance date. The closing of the offering is expected to take place on or about February 23, 2017, subject to the satisfaction of customary closing conditions.

XTL Biopharmaceuticals Ltd is a biopharmaceutical company, which engages in the acquisition and development of pharmaceutical drugs. Its drug development program, focuses on the treatment of Systemic lupus erythematosus (SLE). The company was founded on March 9, 1993 and is headquartered in Raanana, Israel.