Trovagene (TROV): Shoring up the Balance Sheet by Selling Shares Comes with a Price
Shares of molecular diagnostics company TrovaGene (NASDAQ:TROV) are collapsing – down nearly 55% as of this writing. The reason? TrovaGene announced this morning that it will be selling at least 18 million shares of its own stock to raise cash for “research and development activities and for working capital and general corporate purposes.”
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 $1.00 per share and accompanying common warrant. The common warrants will be exercisable immediately at an exercise price of $1.10 per share and will expire five years from the date of issuance.
The Company has granted the underwriters a 45-day option to purchase 2,700,000 additional shares of common stock (or common equivalents) and/or additional common stock warrants to purchase up to an aggregate of 2,700,000 shares of common stock.
Added to its current 4.95 million shares outstanding, this offering promises to dilute existing shareholders by at least 365%. Another reason investors may be selling off TrovaGene stock is the price at which these new shares are being offered. At $1.00 a share, TrovaGene is offering new stock for a price 43% below what its shares cost prior to the offering announcement.
On the other hand, these new shares won’t just raise the share count but they’ll also raise cash. TrovaGene expects the sale of these new shares to help shore up its balance sheet by generating approximately $16.2 million in new capital, excluding the proceeds, if any, from the exercise of the warrants.
Earlier last month, Trovagene completed the first dose cohort in the Phase 1b trial of PCM-075, a highly-selective Polo-like kinase 1 (PLK1) Inhibitor, in combination with LDAC, in acute myeloid leukemia (AML). In the 28-day cycle, three patients were treated with PCM-075 orally at 12 mg/m2 on Day 1 through Day 5, and LDAC was administered as 20 mg/m2 subcutaneously once daily on Day 1 through Day 10. These relapsed or refractory patients may have received as many as three prior regimens for AML. The combination was well tolerated. The independent Safety Review Committee (SRC) has recommended escalating to the second dose cohort of three patients with PCM-075 at 18 mg/m2 in combination with LDAC.