The shelf registration is all about flexibility. It gives Leo the ability to act independently and in the best interest of the shareholders and company. He now has leverage with investors, partners and a myriad of other players.
I have no idea how the market will receive this news but I consider it an astute financing move. Compare this offering vs. an additional ASPIRE/PE deal. With a ASPIRE/PE placement there is an upfront fee, discounted stock price and no control of when shares are sold. This shelf registration allows Leo to avoid the first two and completely control how additional shares hit the market.
To me the market reaction will boils down to trust of management. Either one trusts them or one doesn't. I think Leo/Menon have done and continue to do a stellar job. I'm voting with my wallet and will pick up shares sold by weak handed longs. This deal offers significant financing opportunity at minimal dilution.
In a venture deal it is not uncommon for succeeding rounds to dilute previous rounds by 50% or more. In that world, everyone understands the game... building billion dollar businesses takes money and time. The goal is to be a holder of a small % of the next Google, Apple or FB. 1% of Apple is better than 100% of Polymedix. Keep that in mind as CTIX continues to execute on its technology and business plan.
It should be an interesting next few months.
More on Shelf Registrations below:
An effective shelf registration statement permits issuers to take securities "off the shelf" and offer them to the public on a continuous or delayed basis. This "takedown from the shelf" can be accomplished in a number of types of public offerings. A public offering may be registered by filing a shelf registration statement on Form S-3 (or Form F-3 for foreign private issuers). The shelf registration statement is typically used where the issuer does not intend to immediately sell its securities. It can be used for both debt and equity offerings, including common stock, preferred stock, warrants, debt (convertible and nonconvertible), or equity-related debt securities, which can be sold in one or more offerings from time to time.
