Celsion Corporation (CLSN) Spooks Investors with a Share Dilution

Shares of Celsion Corporation (NASDAQ:CLSN) dived nearly 20% in morning trade Friday, after the drug maker’s stock offering priced at a deep discount. The company said its follow-on offering of 2.64 million shares and warrants priced at $2.50, which is 13% below Thursday’s closing price of $2.86. In addition, the public offering would dilute shareholders’ investments.

The estimated net proceeds to the Company from the sale of the shares of common stock or warrants in the registered direct offering are expected to be approximately $5.8 million. The Company intends to use the net proceeds for general corporate purposes.

Each share of common stock is being sold together with 0.50 warrants, with each whole warrant exercisable to purchase one whole share of common stock. The warrants have an exercise price of $3.00 per share, are not exercisable until 6 months after issuance and will terminate 5 years from the time each warrant is first exercisable.  The gross proceeds of the offering are expected to be approximately $6.6 million, before deducting the underwriting discount and other estimated offering expenses. The closing of this offering is expected to take place on or about October 31, 2017, subject to the satisfaction of customary closing conditions.

On the ratings front, Maxim analyst Jason McCarthy upgraded CLSN to Buy, with a price target of $7, in a report issued on October 4. The current price target represents a potential upside of 145% from where the stock is currently trading. According to TipRanks.com, McCarthy has a yearly average return of 3.0%, a 39% success rate, and is ranked #1572 out of 4702 analysts.

Celsion is a fully-integrated oncology company focused on developing a portfolio of innovative cancer treatments, including directed chemotherapies, immunotherapies and RNA- or DNA-based therapies. The Company’s lead program is ThermoDox®, a proprietary heat-activated liposomal encapsulation of doxorubicin, currently in Phase III development for the treatment of primary liver cancer and in Phase II development for the treatment of recurrent chest wall breast cancer. The pipeline also includes GEN-1, a DNA-based immunotherapy for the localized treatment of ovarian and brain cancers. Celsion has two platform technologies for the development of novel nucleic acid-based immunotherapies and other anti-cancer DNA or RNA therapies.

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