Neuralstem, Inc. (NASDAQ: CUR) is in the process of raising additional capital to help it develop its pipeline and cope with certain regulatory matters and loan agreements. But the company’s fundraising strategy is turning away some investors because it is not the kind of thing that immediately enhances the value of existing shareholders. Neuralstem’s preferred path to fundraising is through a sale of additional shares, which will dilute the stake of existing shareholders, thus the selloff.
How many shares on offer?
Neuralstem, Inc. (NASDAQ: CUR) has filed to offer as many as 20 million shares of its common stock to enable it raise more money. But that is not all as the company will also be offering warrants to purchase up to 20 million shares of its common stock. That planned securities offering signals a dilutive transaction that has triggered investor exit from the stock. However, with the expected funds and pipeline success, Neuralstem’s shares could rebound strongly.
What are the offering prices?
Neuralstem has priced the shares at $0.40 apiece. The warrants to be offered will convert to stock at the rate of $0.40 apiece. The company said that the warrants are immediately exercisable but holders have up to five years to convert them.
What is expected from the offering?
Neuralstem, Inc. (NASDAQ: CUR) is looking to generate $8 million in gross proceeds from the secondary equity offering. The company didn’t say how much in net proceeds it expects, but said that the fundraiser will enable it to meet its various cash needs such as working capital, repaying debt and funding clinical and preclinical activities. The company’s balance sheet as at Dec. 31, 2015 reflected $3.4 million in long-term debt.
Who’s backing the offering?
Neuralstem has tapped Roth Capital Partners and Brean Capital to help it with the shares and warrants offering. The offer is expected to close on May 6.
Neuralstem, Inc. (NASDAQ: CUR) is engaged in developing therapies for central nervous system.