The psychedelics biotech powerhouse, Seelos Therapeutics, made headlines with the recent announcement of a new underwritten public offering estimated to bring in a meager $5.5 million in gross proceeds. The sharp contrast between this humble figure and the company’s substantial public standing has left shareholders shaking their heads in disbelief. The offering is set to conclude around Dec. 1, 2023, eliciting little enthusiasm from investors.
The company’s stock took a severe hit as Seelos shares plummeted by a staggering 35%, dropping from Tuesday’s closing price of $2.35 to a woeful $1.51 at Wednesday’s opening bell. The daily pricing oscillates within the low $1.35 and $1.40 range, painting a grim picture for the once-thriving company.
The gut-wrenching stock plunge comes hot on the heels of the company’s recent 1-for-30 reverse stock split, effective as of Nov. 28, 2023, which saw stock trading on a stock split-adjusted basis at a revised market opening price of $2.71. This move has left a bitter taste in the mouths of long-term shareholders and industry insiders alike.
The lackluster offering, in which CEO Dr. Raj Mehra and other senior management have personally invested, involves a mere 1,781,934 common stock shares, pre-funded warrants to purchase up to 2,422,612 common stock shares, and accompanying common warrants to purchase up to 4,204,546 common stock shares.
Each common stock share and its accompanying common warrant are being hawked to the public at a paltry $1.32 each, while each pre-funded warrant and its accompanying common warrant are being peddled at a minuscule $1.319 apiece, token amounts that reflect Seelos Therapeutics’ current desperate financial predicament.
The pre-funded warrants are poised for immediate exercise at a ludicrous $0.001 per share, while the common warrants will offer no reprieve, with exercise prices set at $1.32 per share and a looming expiration five years post-closure. Such terms underscore the company’s tenuous position in today’s unforgiving market.
Seelos has entrusted the dismal task of offloading all common stock shares, pre-funded warrants, and accompanying common warrants in the offering to Titan Partners Group, a division of American Capital Partners serving as the sole book-runners in this fiasco.
The anticipated proceeds of a meager $5.5 million exclude the exercise of a bleak 45-day option for underwriters to purchase additional common stock shares, pre-funded warrants, and/or common warrants, reflecting a distressing lack of confidence in the company’s prospects within the pharmaceutical sector.
Seelos plans to utilize the net proceeds from the offering for general corporate purposes, furthering the development of its product candidates, including the lead candidate novel ketamine SLS-002, set for an upcoming assessment in a Department of Defense-funded clinical trial targeted at PTSD. The company also hopes to alleviate its financial burden by making periodic payments towards outstanding debts and convertible promissory notes issued back in Nov. 2021.
Photo: Benzinga edit with photo by Raimundo79 and Blue Planet Studio on Shutterstock.