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Expert Financial Analysis and Reporting

Celldex: Equity Offering is a Positive for the Stock (CLDX, Hold, $25.88)

Celldex (CLDX) has just announced a financing in which the Company has issued 7.0 million shares and will receive net proceeds of $163 million. If the Green Shoe is exercised, as seems likely, shares issued and net proceeds would be 8.05 million and about $187 million, respectively.

The Company had $136 million of cash as of the end of 3Q, 2013. On a pro forma basis, it has raised the cash position to $323 million. The recent operating cash burn has been $17.5 million per quarter so that at that rate the Company can fund 18.5 quarters of operations as opposed to 7.8 quarters pre-offering.

The number of shares outstanding is increased from 81.0 to 89.1. At the recent price of $25.88 the market capitalization is now $2.3 billion. This removes the financing overhang for the Company, which was emerging as an issue, and this is a positive for the stock. I think that it is inappropriate to use the term fortress balance sheet for a company burning through $70 million a year. However, this is an exceptionally strong balance sheet for an emerging biotechnology company.

I have an update on recent rindopepimut results as presented at SNO in the works and I will update my investment thinking in that report.

Tagged as , , + Categorized as Company Reports


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