Argos shares drop on news of secondary offering
Argos Therapeutics (ARGS) announced yesterday evening the terms of its upcoming secondary stock offering, which has sent its share price down more than 15% this morning to partially offset the dilution that will occur after the offering has been completed. The company intends to raise $50 million compared to its current market capitalization (value of all currently outstanding shares of stock) of $170 million. Earlier this month we noted that the company brought in a seasoned CFO with extensive M&A (merger and acquisition experience), so we can’t help but think that this development is directly related to the financial game plan he is implementing to prepare Argos for its eventual exit strategy. We will write a more complete update on Argos in this Monday’s issue of Breakthrough Tech Weekly.
Stock Talk
Gary Martin
Why are the Secondary offerings discounted so far below the current stock price? Is this a common practice? It certainly is NOT helping the current stock holders! thanks Gary
Jim Pearce
They have to account for the dilution caused by the issuance of additional shares, so it would not be realistic to try to sell them at or near the current price. But they are trading at a premium to full dilution (-17% vs -22%) so the market is not overreacting to this announcement. We have a phone call into the company to ask them a few questions, don’t know if they will talk to us but we will let you know if they do.
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Robert Katilus
Please explain the reason Args has hired a merger and acquisition expert and is he planning to prepare ARGOS for its eventual exit strategy.What does all this mean to the loyal shareholders who got in early. This doesn’t sound well to me and I’m sure many other shareholders. Are we the victims of the company’s hedge fund partner’s?
Jim Pearce
Robert – I will address that question in today’s issue of BTP Weekly, so please be on the lookout for that when it is published later today. Thank you.
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Lyubov Litvin
What is your advise on ARGS, ZIOP AND LSCC stocks ?
Jim Pearce
I get the sense that cancer immunotherapy space is about to pop, so I’m hanging onto ARGS and ZIOP since I think either or both could be buyout candidates. The large pharma companies are sitting on a huge amount of cash, and will need new revenue streams to offset reduced income from their existing products under ACA so I’m expecting a wave of M&A activity to commence later this year or early next. As for LSCC, I will be taking a close look at its quarterly earning report released at 5 p.m. this evening for any forward guidance it may contain, to determine if/when to get back into it.
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Lyubov Litvin
Dear Mr.Pears, thanks for reply.
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