Citius Pharmaceuticals plunges to all-time low after direct offering announced

The price of the offering represented the lowest ever for Citius / Photo: Shutterstock

Shares of Citius Pharmaceuticals, a small company developing critical care products, plunged nearly 40% to an all-time low on Friday, November 15. The trigger was an announced direct offering at $0.25 per share.

Details

Citius Pharmaceuticals stock dropped almost 40% on the Nasdaq to a record-low of $0.20 per share on Friday. Trading volume, meanwhile, was eight times the average. The company announced it had concluded agreements to issue 12 million shares, along with an equal number of accompanying warrants, at a price of $0.25 per share — the lowest in its public history.

A company sets a below-market offering price when it urgently needs to raise capital, as previously explained by Sergey Glinyanov, a senior analyst at Freedom Finance Global. Citius Pharma stated that the proceeds will go toward general corporate purposes, including drug development and working capital. The offering, expected to close today, Monday, November 18, is projected to raise $3 million before deducting transaction-related expenses.

Note that when Citius Pharma last raised capital, in April, it said that the proceeds would last until December.

About the company

Citius Pharma was founded in 2016 by Leonard Mazur and Myron Holubiak. Until recently, its portfolio included three drugs — for catheter-related infections, lymphoma, and hemorrhoids. In August, the U.S. FDA approved its drug LYMPHIR to treat cutaneous T-cell lymphoma. At the same time, Citius Pharma spun off its oncology division into a separate entity, Citius Oncology. Having acquired LYMPHIR, the spin-off went public and was listed on the Nasdaq through a SPAC deal. Shares of Citius Oncology now trade at just a third of their value compared to the August 13 listing, while Citius Pharma has seen a similar decline. Over the last year, Citius Pharma stock is down more than 74%.
According to MarketWatch, all three analysts who cover Citius Pharma rate it a “buy.” Their average target price is $4.67 per share, more than 23 times the last closing price.