I'm not saying Adam is wrong. The investor could very well be interested in selling their newly minted shares directly to the market. I'm just pointing out that the investor still took a long position. If what Adam is suggesting is true then the investor is not expecting the stock to fall below their $.38 per share cost. No reason to buy unless the investor expects to sell at a profit. To do so in this case the price needs to stay above their cost. This investors is buying near a catalyst; a possibly binary event. I imagine the investor was smart enough to do their due diligence on the science before funding. He's suggesting they don't care and I think he's wrong.
It's probably someone like Josh Scheinfeld, of Lincoln Park Capital. LPC does ATM type funding; though this one is at a set $.38 price. If it is, they'll only be buying a little at a time (usually 100-200k shares sold per sale; in any every other day sales format) which might be why the terms stated "up to" $5 million. The company would draw from the "up to" as needed, provided LPC is not holding more than 4.99% at any one time. And, if the study is successful, the Company would obviously stop selling LPC shares. It's essentially a line of credit.
Anyway, raising money from a flipper is better than raising money from a short. Shorts cause the stock to spiral to these level. This would not be the same thing. But stocks usually stay range bound until LPC buying period ends or until study news.
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