Here’s Why Zosano Pharma (ZSAN) Stock Is Crashing Today

Shoring up the balance sheet by selling stock comes with a price, and Zosano investors are definitely feeling the heat.


After pricing an equity offering that will dilute current investors but help shore up its balance sheet, shares in Zosano Pharma Corp (NASDAQ:ZSAN) are tumbling 44% as of 10:10 a.m. EST.

The biotech firm priced 10,000,000 shares at $5.00 apiece, which was well below the $9.17 per share where the stock had been trading yesterday afternoon. In addition to that deep discount, the offering represents nearly 500% dilution for existing shareholders.

That said, the offering did raise $50 million (before deducting underwriting discounts and commissions and estimated offering expenses), which will allow the company to advance its long-term safety study of its lead product candidate, M207, and for working capital and general corporate purposes.

In addition, Zosano has granted the underwriters a 30-day option to purchase up to 1,500,000 additional shares of common stock at the public offering price, less the underwriting discount.

Earlier this month, Zosano announced that the 100th patient has enrolled and received M207 in the long-term safety study for the acute treatment of migraine. M207-ADAM is an open label study evaluating the safety of the 3.8mg dose of zolmitriptan in migraine patients who have historically experienced at least 2 migraines per month.  Patients are expected to treat a minimum of two migraines per month, with no maximum treatment limits.  The study will evaluate at least 150 patients for six months, and 50 patients for a year at 31 sites in the U.S.  The Company may elect to enroll more than the required number of patients to ensure a robust data set, and achievement of the requisite number of evaluable patients completing 6 and 12 months.  The primary objective of the study is to assess safety of M207 during repeated use over 6 and 12 months.   M207-ADAM study updates include:

  • 103 patients have qualified and received study drug
  • additional 77 patients have signed consents and are in the 2-week run-in evaluation period
  • study patients have treated 278 migraines since study initiation