Verenium Crushed on Offering (VRNMD)

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If any ethanol is supposed to be feasible, it is cellulosic ethanol.  One player in that sub-sector is Verenium Corp. (NASDAQ: VRNMD).  Unfortunately, its shares are getting crushed this morning as it has detailed its planned sale of stock and warrants.  The small company has priced a public offering of 2,250,000 shares of its common stock and warrants to purchase an additional 900,000 shares of common stock at a price to the public of $6.00 per unit.

This will raise approximately $12.3 million and is supposed to keep the company afloat into 2010.  Verenium has approximately 9 million shares outstanding based on the most recent pre-offering data now that it completed a 1 for 12 reverse stock split in recent weeks.  The company claimed roughly $14.9 million of unrestricted cash as of June 30, 2009.  It is still not profitable, but you probably guessed that things are tough because of the “D” on the end of the stock ticker.

There is just one small problem with the offering.  Shares are getting whacked and are down some 27% at $4.80 after closing at $6.60 yesterday.   The good news is that the lows were put in at $4.55 so far.  We have seen 353,000 shares trade hands versus an average volume of 126,000 shares.  The 52-week trading range is $2.76 to $18.60.

There is always a “Caveat Emptor” attached on secondary offerings of small risky stocks, but sometimes these deals go poorly enough that concessions might need to be made.  This looks like an extreme reaction to the offering, but that is the way the ball bounces sometimes.

OCTOBER 6, 2009