Shares in biotechnology firm InspireMD (NYSE:NSPR) have plummeted over -40% today on the news that the company is to release a public offering of 2.8 million shares at $1.75 per share. The company expects to raise about $5 million from the offering, which should close on April 2nd, 2018.
So what does Inspire plan today with the money raised, and why are investors so unhappy about it?
In a statement, the company says that they intend to put $300,000 of the offering proceeds to redeem outstanding shares of its Series C Convertible Preferred stock, while the rest of the $4.7 million will go towards general corporate purposes and research and development.
Perhaps shareholders found this to be a poor use of the money and would have liked the bulk of it to go to something more specific. It could also be that InspireMD shareholders saw the offering price of $1.75 as too low considering Tuesday’s closing price of $2.4, which prompted a sell-off. Slightly more unlikely is that the drop in share prices is a rebound from yesterday’s hike, although a drop of this magnitude seems unlikely if this was the case.
Either way, stocks in InspireMD are currently valued at $1.35, bringing its market cap to $4.2 million USD.
>> InspireMD Signs Distribution Agreement With South Korea, Stock Moves Higher (February)
All this comes after yesterday’s news that InspireMD received regulatory approval for use of its CGuard Embolic Prevention System (EPS) and MGuard Prime technologies in Peru. The approval is good news for the company, which has been in collaboration with Peruvian medical device distributor Dispositivos Medicos E.I.R.L since May last year with this very endpoint in mind. Maximo Arboleda, the General manager of Dispositivos Medicos, said of the approval: “The clinical data from both of these products is quite impressive and we expect our physicians to start using the products very quickly.” Stocks in Inspire jumped 35% on the news yesterday; though this has been marred by today’s unfortunate performance.
InspireMD is an Israeli medical company headquartered in Boston. It specializes in embolic prevention systems, or, in other words, the treatment of artery and vein complications. The company has garnered interest since its stock value broke through the roof in February this year, rising over 3,000% in a couple of days.
Featured image: Profit Confidential
