Heat Biologics Inc. (NASDAQ: HTBX) has flip-flopped in a fundraiser program. The company earlier announced that it wanted to raise additional funds through the sale of shares of its common stock. Then suddenly a press release was issued a day later speaking a different launch: the equity fundraiser has been put on hold.
Heat Biologics Inc. (NASDAQ: HTBX) didn’t explain in many words why it had to suspend the equity offering program. However, it said that putting the fundraiser on hold is designed to allow it time to complete a strategic review process.
It is not currently clear what HTBX’s strategic review entails and investors can only hope that the company will shed more light on the process later. But sometimes strategic reviews are known to end in a strategic investor coming on board or the company selling itself in a deal that is believed to maximize shareholder value.
Until the board and management of HTBX shed more light on the strategic review process, the market can only speculate. But you notice that the suspension of the previously announced equity offering triggered a negative market reaction, possibly because the details surrounding the development were scant.
Typically, secondary equity offering cause jitters among existing shareholders and a suspension should have been greeted by a positive movement in the stock.
Liquidity position – Heat Biologics Inc (NASDAQ: HTBX)
The equity offering was supposed to improve Heat Biologics Inc. (NASDAQ: HTBX)’s liquidity position. The company finished 1Q2016 with cash, equivalents and short-term investments of $11.8 million. The management said the funds were adequate to achieve near-term clinical milestones of two of HTBX’s product candidates. But additional funds would be needed to attain longer-term clinical goals, which explain why the company sought to return to the market to raise more funds through the sale of shares of its common stock.
In the announcement that came earlier, Heat Biologics Inc (NASDAQ: HTBX) didn’t explain how many shares it intended to sell. The company had also not priced the offering. But it planned to grant underwriters the opportunity to purchase additional shares to cover overallotment, which means that HTBX had anticipated strong demand for its shares.