On Jun. 17 Emisphere Technologies, Inc. (OTC:EMIS) revealed that Novatris had terminated the study on PTH1-34 and anticipated no further work on the oral formulation. On the news EMIS plummeted 30.30% to $1.15 on 425 thousand shares.
Yesterday, EMIS took another hit. The price dropped 18.18% to $0.90 on an even greater volume of 884 thousand shares.
The dive was the market’s response to the next agreement of EMIS to raise capital. The company did the same thing last year, and it had a similar negative impact. This time the raised capital is $7.5 million.
While funding is essential for a company that doesn’t have a sustainable source of revenue, this diluting form of getting capital is a serious hit on shareholders. The details of the two private placements are not welcomed by the shareholders as yesterday’s performance demonstrates.[BANNER]
The number of shares EMIS has agreed to sell for the placements is approximately 8.6 million, and the warrants to purchase additional shares would potentially add another 6 million shares. Each unit, consisting of one share of common stock and a warrant to purchase 0.7 shares, will be sold for $0.872.
Keeping that in mind, closing at $0.90 was not the worst possible outcome. The company hasn’t managed to do much more than lose millions of dollars at this point. However, this is the nature of the pharmaceutical sector. Until EMIS manages to generate some revenues, shareholders will have to suffer hits like that.
