Fibrocell Science Inc (FCSC) Feels the Heat of Share Dilution


After pricing an equity offering that will dilute current investors but help shore up its balance sheet, shares in Fibrocell Science Inc (NASDAQ:FCSC) are tumbling 20% as of 10:30AM EST.

The gene therapy company announced today the pricing of an underwritten public offering of 13,636,364 shares of its common stock and common warrants to purchase up to an aggregate of 13,636,364 shares of Common Stock (the Offering). Each share of Common Stock is being sold together with a common warrant to purchase one share of Common Stock at a combined effective price to the public of $0.77 per share and accompanying common warrant.

The common warrants will be exercisable immediately at an exercise price of $0.77 per share and will expire five years from the date of issuance. The shares of Common Stock (or Common Stock equivalent) and the accompanying common warrants can only be purchased together in this Offering but will be issued separately.  This Offering is expected to close on or about December 11, 2017, subject to customary closing conditions.

In addition, Fibrocell has granted the underwriter a 30-day option to purchase up to 2,045,454 additional shares of Common Stock at a purchase price of $0.76 per share and/or common warrants to purchase up to an aggregate of 2,045,454 shares of Common Stock at a purchase price of $0.01 per common warrant, less the underwriting discounts and commissions.

That said, the offering did raise $10.5 million (prior to deducting expenses), which will allow the company to advance its clinical and pre-clinical development of its product candidates, FCX-007 and FCX-013, for the research of potential product candidates under its 2015 Exclusive Channel Collaboration Agreement with Intrexon Corporation and for other general corporate purposes.

On the ratings front, FCSC stock has been the subject of a number of recent research reports. In a report issued on October 5, H.C. Wainwright analyst Joseph Pantginis reiterated a Buy rating on FCSC, with a price target of $7.60, which implies an upside of 656% from current levels. Similiary, Canaccord’s Arlinda Lee assigned a Buy rating to the stock and has a price target of $7.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Joseph Pantginis and Arlinda Lee have a yearly average loss of 20.3% and a return of 1.3% respectively. Pantginis has a success rate of 28% and is ranked #4669 out of 4721 analysts, while Lee has a success rate of 41% and is ranked #2272.

Fibrocell Science operates as an autologous cell therapy company, which engages in the development of treatments for skin and connective tissue diseases with unmet medical needs. Its clinical and pre-clinical programs include treatments for restrictive burn scars, vocal cord scars, and acne scars.