Sophiris Bio Inc (NASDAQ:SPHS) Closes Equity Fundraiser, But What Does It Expect?


Sophiris Bio Inc (NASDAQ: SPHS) has closed the equity fundraiser that it recently announced to enable it plug some holes in its budget. In the securities offering, the company sold new shares and warrants to purchase shares.

The management priced each common stock in the equity offering at $1.40. The warrants gave investors the right to purchase ½ of a share in Sophiris for $1.40 within a period of five years after the close of the transaction.

$5 million sought, but $4.6 million expected

Sophiris Bio Inc (NASDAQ: SPHS) sought to raise $5 million through the equity offering, but the actual net proceeds it receives will be less because of various expenses related to the offering. After deducting underwriter fees and other expenses, Sophiris expects to receive $4.6 million in net proceeds from the equity offering transaction.

Plugging cash hole

In the previous quarterly report (4Q2015), Sophiris talked about its various drug development program and explained why it would need more money to attain its various goals. At the time, the company said the funds it had or could access could only last it until 3Q2016. As such, the management saw the need to raise additional capital to ensure smooth operations.

Where will Sophiris Bio Inc funnel the proceeds?

Sophiris Bio Inc (NASDAQ: SPHS) has identified various areas where it hopes to spend the funds generated from the latest equity fundraiser. One of the uses for the money is to fund general corporate purposes, which include working capital. The company also intends to use the money to pay down its debt to at least strengthen its balance sheet.

Sophiris said it had an outstanding principal balance of long-term debt amounting to $5.3 million as of the end of December 2015. The burden was building up because the loan attracts monthly interest. Therefore, the proceeds that the company has raised will help it improve the balance sheet leverage.

1Q2016 numbers

In 4Q2015, Sophiris Bio Inc (NASDAQ: SPHS) logged EPS loss of $0.15, but that was better than EPS loss of $0.31 in the corresponding quarter in 2014.


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