Health and Healthcare

Cyclacel Pharmaceuticals Investors Should Be Furious After This Move

Chris Lange

Published: April 21, 2020 11:20 am

Cyclacel Pharmaceuticals Inc. (NASDAQ: CYCC) shares were crushed on Tuesday after the company announced the pricing of a secondary offering. Investors are obviously not happy with the dilution but other recent moves make it tough to have a positive take on this company.

The company recently completed a reverse stock split—something else no investor wants to see. Cyclacel effected a 1-for-20 reverse stock split of its outstanding common stock on April 15. The board of directors unanimously approved the move.

Now that the reverse split is complete, Cyclacel is further diluting investors with a secondary offering.

The company announced early on Tuesday that it is pricing a public offering with expected total gross proceeds of approximately $20 million. Keep in mind that this company only has a market cap of just under $4 million (including Tuesday’s move).

As per the secondary offering, Cyclacel is offering 4 million shares of common stock and warrants to purchase up to 4 million shares of common stock. According to the release:

Each share of common stock and, as applicable, each pre-funded warrant, is being sold together with a common warrant to purchase one share of common stock at a combined effective price to the public of $5.00 per share and accompanying common warrant, and/or $4.999 per pre-funded warrant and accompanying common warrant.

The common warrants will be immediately exercisable at a price of $5.00 per share of common stock and will expire five years from the date of issuance. The shares of common stock and/or the pre-funded warrants, and the accompanying common warrants, can only be purchased together in the offering but will be issued separately and will be immediately separable upon issuance.

Cyclacel stock traded down about 51% to $4.20 on Tuesday, in a 52-week range of $4.12 to $20.40. The consensus price target is $130.00.