Due Diligence on DCTH:
This S1/A is a lot cleaner than previously filed with two significant inducements:
1.Series A units offered with ability to buy more common shares using 1 year blackout warrants for two common shares (likely post FDA approval in early 2019). Warrants expire in 2023 (funds to ICC approval date in 2023).
2. Series B units offered only as a replacement to Series A at a penny discount. This is more like a back up plan, where if Series A is not fully subscribed, the investors with 4.99% holding can go upto 9.99%. All series B units offered will reduce only the unsold series A units from (1) above.
So what does this mean,
(A) Regardless of Series A or B units issued, at no point the common shares count will increase more than 250M under this offering. Hence the total outstanding will be.less than Authorized 500M (max of 473M = 223M current outstanding+ potentially 250M under this offering)
(B) Only institutional investors will be allowed to buy Series A or B.
(C) DCTH does not expect series A to be fully subscribed, hence Series B discount offer of the same thing to 4.99% holders as an incentive. If Series A units are fully subscribed, there will be no Series B units, since it has to replace unsold Series A units units one-for-one.
(D) After 1 year, in order for warrants to be exercised for common shares in excess of total outstanding 500M, DCTH will have to file for increase in Authorized Shares from 500M to about 1B shares ( this is what Sam refers to every time), is conditional upon many subjectivr things to occur. However DCTH have 1 year to figure that out. DCTH and ROTH are hoping that, in all likelyhood with FDA approval in late 2018, the pps will rise to such an extent that warrants offering will never be exercised.
So what does DCTH gets from this,
(i) Equity financing to fund operations and cash needs until next year
(ii) Institutinal investors, not irrational when it comes to trading.
(iii) With toxic financing gone, and funding for year in place, they can focus on real work of progressing FDA approval and increasing sales in Europe. So what about my hypothesis of ATNX i.trested in DCTH: with so many positives and an impending FDA approval of CHEMOSAT , this deeply undervalued stock is ripe to pick-up and synergize some of the ecomonies of scale in operations by relocating to their upcoming massive manufacturing plant in Choutauqua Industrial Development (CIDA) in Dunkirk, NY by 2019/2020. This in addition to all the the benefits listed in my sticky note http://ccida.com/athenex-presentation/