Heat Biologics (HTBX) Cashes Out; Shares Take a Hit

With its stock gaining over 250% in just a few days, Heat Biologics (NASDAQ:HTBX) is cashing out at the top. On Thursday, the drug maker announced the pricing of an underwritten public offering with gross proceeds of approximately $18,000,000 (before deducting underwriting discounts, commissions and other offering expenses), which will dilute current investors. Following the announcement, HTBX shares fell over 50% to $1.27, creating what is known as a “bull trap.”

The offering consists of: (i) 3,000,000 shares of our Common Stock together with a number of Common Warrants to purchase 1,500,000 shares of our Common Stock, and (ii) 9,500,000 Pre-funded Warrants, with each Pre-funded Warrant exercisable for one share of Common Stock, together with a number of Common Warrants to purchase 4,750,000 shares of our Common Stock. The Common Warrants will have an exercise price of $1.584, will be exercisable upon issuance and will expire five years from the date of issuance. Heat Biologics has granted the underwriters a 45-day option to purchase up to an additional 1,875,000 shares of Common Stock and/or 937,500 Common Warrants to cover over-allotments if any.

However, these new shares won’t just raise the share count but they’ll also raise cash. HTBX expects the sale of these new shares to help the company to advance its clinical programs and execute the following milestones:

  • An interim data readout readout on the phase 2 NSCLC in the fourth quarter of this year and a final Phase 2 data readout in Q2 2019, followed by a Phase 3-ready NSCLC program in Q3 2019.
  • The enrollment of the first patient in Phase 1 clinical trial for PTX-35 in Q1 2019 and an interim data readout in Q3 2019.
  • The enrollment of the first patient in the company’s ComPACT trial in Q4 2018 and anticipates an interim data readout in Q2 2019.

The offering is expected to close on May 7, 2018, subject to customary closing conditions.


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