After the company revealed the pricing details of its recently announced common stock offering, shares of TherapeuticsMD (NYSEMKT: TXMD), a small-cap biotech focused on women's health, fell 11% as of 10:40 a.m. EDT on Tuesday.
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TherapeucticsMD announced yesterday that it wanted to sell 12.4 million shares of common stock to the public. That move makes sense since the company held only $97 million in cash on its balance sheet as of June 30. That's not a huge number when compared to the company's net loss of $41 million through the first six months of the year.
However, investors learned today that the secondary offering is taking place at $5.65 per share, a sizable discount to yesterday's closing price of $6.06 per share. That suggests that the company had to give in on pricing in order to raise all of the capital that it wanted.
On the plus side, the 12.4 million new shares will dilute existing shareholders by only about 6%. However, given the disappointing pricing details, it isn't hard to figure out why shares are tumbling today.
Looking beyond the capital raise, investors need to keep their eyes focused on the resubmission process for TX-004HR, which is the company's potential treatment for dyspareunia. Management recently announced that it had successfully submitted all of the additional safety data that was requested by the Food and Drug Administration. The company was also informed that it has a meeting with the agency scheduled for Nov. 3 at which it hopes to get the go-ahead for resubmission.
Will the FDA give the company the green light in November? I certainly hope that the answer is yes, but TherapeuticsMD doesn't exactly have a sparkling track record in dealing with regulators. For that reason, I continue to believe that caution is warranted.
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