HEB..$.80-Supplement on Sept 24th Addendum to the July 2nd prospectus supplement. Looks like the company moving forward will have to raise at a higher price ($2.18) particularly after reading the prospectus and their goal to raise up to $75m with the 40m authorized & approved. 11m shares are gone with 10m raised. I give my additional thoughts below: http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=8502073
Over 25% of offering already sold is good news as we are still over 2 months out on their Dec 20th ADCOM panel. ATM’s are more common for biotech companies & better for investors than piples as the company in need of the financing controls when they choose to sell shares unlike convertible debt to a fund where that group of investors is selling shares regardless of the share price. Looks to me like HEB sold the shares into strength (above $.90) IMO much higher than current share price. Currently there are about 29m shares left to be allocated through the offering. The offering in dollar amount was up to 75 million. They wanted to achieve this through 40m shares. 9.6m (after commission) have been raised to date of the 75m they hope to raise. Most of those shares were sold close to $1.00. I believe most of the 10m of 40m were sold on Sept 24th near the $.95 price avg (Volume on Sept 24th was 14.6m shares..see graph below). To raise the 75m that the company wants to raise with the allocated & approved 40m shares, they would have to sell the remaining 30m shares at an avg price of $2.18. If they sold the remaining 30m shares at even only $1.50 that is still just 45m dollars. With only 10m raised of the 10m shares that would put them at $55m raised which is $75m short of their goal. That means that they would need to sell shares at a higher price or go to the board to get more shares allocated & approved. I don’t think that will happen prior to the ADCOM Mtng & PDUFA date in Feb. The company is hoping & expecting a positive ADCOM Mtng so that they can sell the remaining 30m shares over $2 and not the current price ($.80). Again they would have to sell those 30m remaining shares allocated at near $2.20 to get near their goal of raising up to 75m dollars.
THE OFFERING
Offering Price, Shares, and Proceeds: Variable at-the-market pricing, with aggregate gross proceeds of up to $75.0 million. Up to 40,000,000 shares of common stock have been approved and allocated to the offering. As of October 1, 2012, 10,919,700 of these shares have been sold. offering that may be made from time to time through our agent, Maxim Manner of Offering: “At-the-market” .
Almost 11,000,000 shares have been sold through the ATM since September 14. The date of the last 10Q addendum. The O/S had not changed since that time.
There have been 63,530,600 shares sold since Sept 14th when the addendum to the Prospectus was made Looks like a lot of shares were sold on Sept 21st & Sept 24th which is where the 10m in proceeds from the 11m shares sold have been raised. If the company needs another Phase III confirmatory trial (after Accelerated Approval) then the funds will prove to be valuable to push the company forward with their NDA for CFS approval.
HEB is definitely going to be a catalyst mover into their ADCOM mtng (12/20) & PDUFA date (2/2). I believe that it will be well over $1 as we move towards the end of November. Some will play the potential price appreciation up to the catalyst. Others may play this as a lotto and hold a few for a positive ADCOM mtng. There may be short-term fluctuation but I think that this should be trading higher in mid-late Nov/early Dec. This is what I am looking for as we move forward with this stock. I continue to look at this as a potentially solid trade in HEB. These type of plays are risky but can provide solid upside & appreciation in price as HEB has done in the past on previous moves upward in 2009. With two solid catalysts, this should not be hard to do.
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