SIGA Technologies, Inc. (OTCMKTS:SIGA) had been ripping higher in recent weeks and months, but got smacked down hard on Monday on news that the Company was doing a rights’ offering this week. The move had been previously announced, but seemed to come as a surprise to the market.
Recent action has seen 12% added to share values of the name over the past month of action. The situation may be worth watching. The SIGA stock chart is littered with sudden rips. Furthermore, the name has registered increased average transaction volume recently, with the past month seeing 85% above the average volume levels in play in this stock over the longer term, suggesting a very active market and a ton of interested participation.
SIGA Technologies, Inc. (OTCMKTS:SIGA) bills itself as a company that engages in the development and commercialization of solutions for unmet medical needs and bio-threats in the United States.
Its lead product is Tecovirimat, an orally administered antiviral drug for treating orthopoxviruses, including smallpox. SIGA Technologies, Inc. was founded in 1995 and is headquartered in New York, New York.
As the company frames itself, “We are a company specializing in the development and commercialization of solutions for serious unmet medical needs and biothreats. Our lead product is Tecovirimat, TPOXX®, also known as ST-246®, an orally administered antiviral drug that targets orthopoxvirus infections. While TPOXX® is not yet approved as safe and effective by the U.S. Food & Drug Administration, it is a novel small-molecule drug that is being delivered to the Strategic National Stockpile under Project BioShield. In August 2016, the company announced the completion of enrollment and dosing in the second and final cohort of healthy subjects for the Phase III clinical study of TPOXX.”
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Monday’s announcement comes on the heels of word that the United States Bankruptcy Court for the Southern District of New York entered an order approving SIGA’s proposed transaction under Option 1 of the Debtor’s Third Amended Chapter 11 Plan, dated April 7, 2016, under which SIGA will pay PharmAthene the entire balance of the outstanding judgment on or before November 30, 2016. A copy of the Order, as entered by the Bankruptcy Court, can be found at https://cases.primeclerk.com/siga/.
“We are pleased the Bankruptcy Court has approved SIGA’s proposed transaction. We look forward to continuing to grow our business by delivering on our contracts with the U.S. Government and advancing the ongoing clinical trials of TPOXX with the goal of FDA approval,” said Eric Rose, Chairman and CEO, SIGA Technologies, Inc.
Last month, SIGA announced completion of enrollment and dosing in the second and final cohort of healthy subjects for the Phase III clinical study for its lead drug candidate, TPOXX™ (tecovirimat), for the treatment of orthopoxvirus infections. There were no drug-related Serious Adverse Events reported through 14 days of dosing, and 14 days of additional follow up. This final cohort of the Phase III pivotal safety study was conducted at eleven approved clinical investigation sites in a total of approximately 380 subjects.
At this point, it looks as if the market for SIGA stock was not anticipating the evolution of the actual rights offering.
For a little background, a rights issue is an invitation to existing shareholders to purchase additional new shares in the company. The problem with this type of situation is that everyone understands the shares are going to available for purchase potentially well below the current market price. In a case like this one for SIGA stock, with strong revenues ($8.69 mln on a TTM basis), the transactions are going to come to fruition, which funds future operations and grants liquidity to the company, but guarantees a hit to share prices, at least over the near term.
In essence, the company is giving shareholders a chance to increase their exposure to the stock at a discount price.
Troubled companies typically use rights issues to pay down debt. In this case, SIGA stock prices are reacting to the Company finding a solution to the PharmAthene obligation.
SIGA is one to keep on the radar in the near term. At this time, carrying a capital value in the market of $141.4M, SIGA has a significant war chest ($78.02M) of cash on the books, along with total assets greater than $200M. Frankly, there are worse ways for the current step to unfold, and this may present an opportunity. We will update the situation again soon with more details. For continuing coverage on shares of $SIGA stock, and our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!