Celsion Corp. (NASDAQ: CLSN) was one of the more recent biotech implosions we have monitored. The company’s situation looked dire, and still does on a static basis. Now comes news that the company is raising capital in a direct share offering.
The troubled company said that institutional investors have agreed to buy $15 million worth of securities at-the-market, and that it was led by a dedicated health care fund. Net proceeds from the offering are expected to be approximately $13.8 million, and Celsion now expects to have an unaudited cash and investment balance of approximately $47 million. The company intends to use the net proceeds from this offering for general corporate purposes. The terms are as follows:
The company agreed to sell an aggregate of 15,000 shares of its zero coupon preferred stock (which are convertible into a total of approximately 12.1 million shares of common stock) and warrants potentially exercisable for up to approximately 6.0 million additional shares of its common stock. In addition to the preferred stock not having a required dividend right, the preferred stock will not have any preferences over the Company’s common stock, including no liquidation preference rights. Subject to certain ownership limitations, the preferred stock is convertible at any time at the option of the holder into shares of common stock at a conversion price of $1.2425 (which represents $0.0625 above $1.18, the closing bid price of the common stock on the previous trading day). The warrants will be exercisable at a price of $1.18 per share and will expire five years from the issuance date.
Celsion has opened and shares are down 5% at $1.135. This is a company that we said has a questionable future, and the market cap is now $41.6 million before the effects of this direct securities offering. Keep in mind that the 52-week trading range is $1.13 to $9.44.
Usually we would be slamming a company for raising cash at the bottom after a massive implosion. This is unfortunately a situation where Celsion needs the capital regardless of its share price and regardless of how much it dilutes shareholders down the road. If the financing closes as described, it will at least offer a longer life-line to Celsion and its shareholders.