Stock prices of CNS Pharmaceuticals, which develops treatments for cancers of the brain and central nervous system, plunged 35% on Wednesday, reaching an all-time low. The company announced the price at which it will sell its shares to private investors. The figure turned out to be a third lower than previously stated, and the volume was higher, which will significantly dilute the stakes of existing shareholders.
Details
CNS Pharmaceuticals’ stock prices plummeted 35.2% to $1.84 on Nasdaq on Wednesday, June 26. This is the lowest the company’s stock has ever traded on the exchange. After the close of trading, they continued to fall, down 3.8%. In pre-market trading on Thursday, they dropped another 3.3%. Over the past year, the company’s stock has lost nearly 100% of its value.
On Wednesday, CNS Pharmaceuticals announced it will sell 568,000 shares to institutional investors at a price of $2.45 each, along with an equal number of five-year warrants at $2.32 each. The deal is expected to close on June 27. CNS plans to receive approximately $1.39 million before deducting placement expenses.
Context
CNS announced an additional share issue for institutional investors two weeks ago. On June 10, it filed a registration statement with the U.S. Securities and Exchange Commission (SEC) for shares worth $9.2 million. On June 14, it announced the intention to sell 366,000 shares at $3.75 each, along with an equal number of five-year warrants at $3.62 each. In the prospectus for the placement, the company stated that after the additional issue, there would be 845,000 shares on the market, with new shares making up 38%. The deal was planned to close on June 17.
The parameters of the additional share issue announced on June 26 are different. The price of shares and warrants is a third lower. The total transaction amount remains the same due to the sale of a larger number of shares. The portion of new shares in the increased authorized capital is over 50%.
The funds are planned to be used for working capital and general corporate purposes.
What CNS Pharmaceuticals does
CNS Pharmaceuticals is developing drugs aimed at treating brain cancer and central nervous system lymphoma. Its main drug candidate is Berubicin, a type of anti-cancer anthracycline, which is already being used to treat certain cancers. The company expects that, unlike its predecessor, Berubicin can cross the blood-brain barrier, a sort of filter that prevents various microorganisms and toxins from entering the nervous tissue but also hinders the treatment of certain diseases by perceiving drugs as a threat.
CNS’s drug could aid in treating glioblastoma multiforme, a rare and malignant type of brain cancer. The median survival from the time of diagnosis is 15-16 months, with only about 25% of patients surviving more than two years, according to the company’s statistics. The main clinical data for the drug is expected to be reported in 2025. In the meantime, the company is just spending money, as indicated by its financial results for the first quarter of 2024.
About the shares
According to MarketWatch, the company is being tracked by one analyst, who rates the stock as a Hold.
