A Very Big Bet, Aastrom Biosciences (ASTM)
ASTM announced, 1/14/10 that it intends to offer to sell, subject to market and other conditions, units consisting of shares of its common stock, Class A warrants and Class B warrants, in an underwritten public offering.
- ASTM will grant the underwriter an over-allotment option to purchase additional shares of common stock and/or warrants in an amount up to 15% of the number of shares of common stock and warrants underlying the units sold pursuant to the offering. These additional shares of common stock and/or warrants would be exercisable at any time up to 30 days from the pricing of the offering (Oppenheimer & Co is acting as the sole underwriter for the offering).
Updating from our blogs on 10/25/09, 11/9/09 and 11/16/09 … The NASDAQ Hearings Panel Granted an Exception Period to ASTM to remain listed on the stock market on 11/9/09 until 3/31/10. The panel’s determination letter, dated 12/8/09, states that ASTM must meet the $1.00 minimum closing bid price requirement for a minimum of 10 consecutive business days prior to 3/31/10 in order to remain listed after such date. In the determination letter, the panel also acknowledged ASTM’s commitment to implement a reverse stock split to regain compliance.
Bottom Line: This scenario is a big bet and bold move … however, my question is … have all oppurtunities been strategically evaluated.
- Understanding that there is a new CEO, Tim Mayleben in a 20 year old company with $17.36 M in cash; how does this financing … facilitate his capacity … to execute,
- NO news until Q1-2/10 time frame from trials could be a factor,
- Also, the listing clock is running, 3/31/10,
- ASTM’s ability to slow the stock slide and help the proposed reverse has not worked; but, the short position has been cut,
- ASTM has also been totally a retail play with 4.6% institutional investors; however, the sector is recovering from last year’s turmoil,
- Concerns are insider ownership is a small (0.18%) while the current outstanding shares amount to 173.97 shares with a float of 173.62 shares,
- Any offering in front of a reverse will cause extreme dilution to current shareholders as the moving averages are declining (in the after-market) confirming the downward momentum ($0.28) immediately post the press release and is currently below its 50-day moving average ($0.31) as well as below its 200-day moving average ($0.371),
- ASTM states, it intends to use the net proceeds of the offering for general corporate purposes including conducting operations and continuing its clinical development programs,
- So, is this financing to realize appreciation … by forming a syndicate of institutional investors … needed now,
- Will this offering with such a discounted pricing of shares, over allotment plus units and near-term warrants in front of data enhance the listing process, sustainability and viability,
- ASTM should be focused on forming partnership(s) …. as results from the HEART TRIAL and REVASCULATION study could be available Q1-2/10,
- On the surface, this scenario might enhance institutional ownership but could it stimulate partnering opportunities,
- With the current number of comparable trials about to disclose data; positive results from any stem cell trial will enhance the industry sector and conversely ASTM,
- Based on the … position ASTM is in … why is the issue … damn the dilution,
- Let’s NOT forget that the existing shareholders.
