Soligenix, Inc. (OTC:SNGX) stock is dropping down as a response to investors’ fears of dilution. Looks like each month the company is announcing another prospectus about the next tranche of shares and warrants to be issued and understandable, about the next resale of shares.Last month, SNGX has done a securities offering for the total amount of $5,75 million. Then, the company’s North American commercialization partner Sigma-Tau Pharmaceuticals, Inc. invested $1,764,759 in this offering.
The net proceeds from the offering will be used for working capital and general corporate needs.
One month later, this Tuesday, SNGX published its next prospectus, this time related to the resale of up to 31,458,638 shares of SNGX common stock by the so called Selling Stockholders.
In the above prospectus, SNGX states that “the common stock offered by this prospectus shall be adjusted to cover any additional securities as may become issuable to prevent dilution resulting from stock splits, stock dividends or similar transactions.”
Even if dilution is prevented, it can be expected that the excess supply of SNGX stock will prevail. As the theory says, when there is over supply, the prices are dropping down.[BANNER]
One of advantages of the above mentioned shares resale would be the increased average volume traded of SNGX shares, as it was the case yesterday. SNGX stock pulled back 10.51%, in a volume exceeding almost eighth times the three-month average.
The second good advantage is that according the prospectus, the so called Selling Stockholders will have the opportunity to pledge or grant a security interest. If they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of common stock under the prospectus.
In order not to waste your time with details from the above mentioned prospectus, on its page 11 are presented in words and numbers the risks of the “substantial dilution related to issued stock warrants and options.”
