Why Does Bellerophon Therapeutics Inc. (NASDAQ: BLPH) Need So Much Cash?


Although Bellerophon Therapeutics Inc. (NASDAQ: BLPH) exceeded earnings expectations in 1Q2016, it was evident that it needs to boost its cash position. But, what are the management’s options toward raising additional capital for the company?

Bellerophon can choose to raise additional capital through equity, debt or a combination of the two. But going by a recent regulatory filing by Bellerophon, the management appears to lean toward equity offering, because it appears to be a lower cost path to bolstering the company’s cash position.

Equity issuance

Bellerophon Therapeutics Inc. (NASDAQ: BLPH) has identified equity issuance as a viable path to raising additional capital. As such, the management recently talked about an arrangement with FBR Capital and MLV & Co to help it sell additional shares to interested investors. As such, FBR and MLV will act as BLPH’s distribution agents and they will distribute the shares at dates they determine as suitable.

How much is being sought Bellerophon Therapeutics Inc. (NASDAQ: BLPH)?

The target is to raise $5.7 million through the equity offering arrangement. Bellerophon Therapeutics Inc. (NASDAQ: BLPH) said it would leave the issue of selling its shares to the distribution agents who will determine the method to offer the shares. However, the company did say that the fashion of offering its common shares by the agents should be deemed as at the market offering.

Although Bellerophon has finalized most of the details of the equity offering with the agents, there is no guarantee that the sale of the shares will be made because the company can pull the offering. Additionally, no specific dates have been identified for when the agents will start selling the shares.

What goes to the agents?

Bellerophon said that the agents in the equity offering will take 3% of the gross proceeds of the sale of the common shares.

What transpired in 1Q?

Bellerophon Therapeutics Inc. (NASDAQ: BLPH)’s EPS loss of $0.54 was better than EPS loss of $0.65 that analysts anticipated on the average.


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