KemPharm: The Secondary Offering From Hell
KemPharm shares were crushed on Friday after the company announced that it would be conducting a secondary offering.
KemPharm Inc. (NASDAQ: KMPH) shares were crushed on Friday after the company announced that it would be conducting a secondary offering. A fair number of health care companies conduct secondary offerings after positive clinical results or milestone payments, or really any time the stock jumps, to capitalize on the gain. This doesn’t seem to be the case with KemPharm.
Prior to the secondary offering, the company had a market cap of roughly $67 million. At the end of its most recent quarter, the company had roughly $28.2 million in cash, cash equivalents and short-term investments at the end of the June quarter.
The company intends to price its 8.33 million shares at $3.00 apiece, with an overallotment option for an additional 1.25 million shares. At this price, the company is looking to raise about $28.75 million in gross proceeds.
RBC Capital Markets is acting as the sole book-running manager for the offering. Oppenheimer is acting as the lead manager, and Janney Montgomery Scott and Roth Capital Partners are acting as co-managers for the offering.
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KemPharm intends to use the net proceeds of the offering primarily to fund an NDA submission for KP415, to initiate a pivotal trial for KP484. The remainder will go toward general corporate purposes.
Excluding Friday’s move, KemPharm has underperformed the broad markets, with the stock up 6% in the past 52 weeks. In the past quarter alone, the stock is down 38%.
Shares of KemPharm were last seen down about 32% at $2.85, with a consensus analyst price target of $11.33, a 52-week range of $2.71 to $8.40 and a market cap near $45 million.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
