Nothing motivates sellers in a stock quicker than a company hinting of or executing a public offering for additional shares of common stock. For many small cap companies, their ability to raise funds often depends on the public offering route. InspireMD (OTC: NSPR) announced this morning it had filed a registration statement with the SEC for a proposed $40 million offering. The company plans to use the proceeds for three purposes that include financing the worldwide commercialization of its MGuard stent for treating patients suffering acute myocardial infarctions, pursuing FDA approval in the United States, and redeeming its convertible debentures.
For current shareholders, the offering holds a double-edged sword in the short term. First, the additional shares dilute potential benefits, and secondly, the yet-to-be-announced price of the offering puts a temporary ceiling on the price that buyers might be willing to pay for shares. Why would a buyer want to pay a higher price today than what the shares will sell for tomorrow? The result of an announced offering usually results in lower share prices in the near term.
The trading action today in shares of InspireMD followed the slippery pattern of the three previous sessions. Since last week, the stock has declined by nearly 25%. On the opening bell this morning, buyers rushed to grab shares and the stock gapped up 5 cents above Monday’s closing price to start the day at $2.10, which also marked the high trade for the session. It did not take sellers long to assert their will as shares prices fell to a session low of $1.87 before the first 30 minutes of the trading day had elapsed. The stock finished the day a few pennies above the intraday low to close at $1.91 for a loss of 6%. Almost 200,000 shares traded during the session, which fell well shy of the 341,000 shares exchanging hands on an average day.
Beginning around the first of June and up until the last nine days, share prices for InspireMD have logged an impressive run from an annual low of $0.60 to $2.50 for a gain of over 300%. The 52-week high for the stock occurred last November when shares traded for $2.59.
Other recent news for InspireMD includes another press release this morning indicating that the present Chief executive Officer, Ofir Paz, plans to step down from his duties as the company prepares for the commercialization of MGuard.
On September 12, 2012, the company released fiscal year 2012 financial results that showed a decrease in revenues and profits from the previous year. According to the company, the comparisons were skewed by a non-recurring large order in 2011 and the transition to a different year-end date.
A month ago, InspireMD said that a randomized trial of MGuard showed positive results in patients suffering heart attacks compared to present stent technology.
InspireMD is a medical device company with its headquarters in Tel Aviv, Israel. The company mainly focuses its efforts on the development and commercialization of its MGuard stent used in patients with acute coronary episodes. The company also plans to develop technology for other vascular procedures. The company was founded in 2008.