Zosano Pharma Corp (ZSAN) Shares Fall on the Back of Equity Dilution

Zosano Pharma Corp (NASDAQ:ZSAN) investors are wildly disappointed today after the medical patch maker announced the pricing of an underwritten public offering of 17,000,000 shares of its common stock at a price of $1.50 per share, a 13% discount to yesterday’s closing price.

All shares in the offering are being sold by Zosano, with expected gross proceeds to Zosano of $25.5 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by Zosano.  The offering is expected to close on or about March 23, 2017, subject to the satisfaction of customary closing conditions.

In addition, Zosano has granted the underwriters a 30-day option to purchase up to 2,550,000 additional shares of common stock at the public offering price, less the underwriting discount.

Zosano intends to use the net proceeds of the proposed offering to fund the manufacture of its lead product candidate, M207, in sufficient quantities to support its long term safety study and associated regulatory activities necessary to file for product approval, and to fund a portion of the long term safety study itself.

Shares of Zosano are falling 7% to $1.60 in Friday’s trading session.¬†ZSAN has a 1-year high of $3.54 and a 1-year low of $0.45. The stock’s 50-day moving average is $2.01 and its 200-day moving average is $1.09.

On the ratings front, Roth Capital analyst Scott Henry reiterated a Buy rating on ZSAN, with a price target of $3.25, in a report issued on March 9. The current price target represents a potential upside of 89% from where the stock is currently trading. According to TipRanks.com, Henry has a yearly average loss of 0.1%, a 43% success rate, and is ranked #3270 out of 4558 analysts.

Zosano Pharma Corp. operates as a biopharmaceutical company. It engages in developing products based on the novel transdermal drug delivery technology. The company is developing products by using micro needle patch system, which delivers therapeutic compounds through the skin and provides rapid systemic drug delivery in a convenient, needle-free and pain-free system.


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