Here’s Why Moleculin Biotech Inc (MBRX) Is Down Big Today

Shares drop after the company announces the pricing details of a common stock offering.

After the company revealed the pricing details of its common stock offering, shares of Moleculin Biotech Inc (NASDAQ:MBRX) tanked nearly 26% in Friday’s trading session.

Moleculin announced this morning that it will be selling at least 4.29 million shares of its own stock to institutional investors.

Added to its current 21.14 million shares outstanding, this offering promises to dilute existing shareholders by at least 20%.

Another reason investors may be selling off Moleculin stock is the price at which these new shares are being offered. At $2.10 a share, Moleculin is offering new stock for a price 25% below what its shares cost prior to the offering announcement. Coincidentally, nearly the same amount that the stock is down today.

In addition, for each share of common stock purchased by an investor, such investor will receive from the Company an unregistered warrant to purchase 0.5 of a share of common stock. The warrants have an exercise price of $2.80 per share, will be exercisable six months from the date of issuance, and will expire five years from the initial exercise date.

On the other hand, these new shares won’t just raise the share count but they’ll also raise cash. Moleculin expects the sale of these new shares to help shore up its balance sheet by generating as much as $9 million in new capital, excluding the proceeds, if any, from the exercise of the warrants. The Company intends to use the net proceeds of this offering for its planned clinical trials, preclinical programs, for other research and development activities and for general corporate purposes.

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