Check-Cap Ltd (NASDAQ:CHEK) dropped more than 15% after announcing a definitive agreement with several accredited and institutional investors for the sale and acquisition of 25,925,926 of its common shares and short-term warrants to buy 25,925,926 of its common shares through a registered direct offering.
The company sells each share with a short-term warrant to buy an ordinary share at an offering price of around $1.35 per share and warrant. Interestingly, the warrants have two 1.5 years terms from the date of issuance and are exercisable immediately at $1.5 per share. Check-Cap expects the registered direct offering to close around July 2, 2021, subject to meeting necessary closing conditions.
Gross proceeds from the direct offering before accounting for offering expenses and placement agent charges and minus proceeds realized after exercising the short-term warrants to acquire shares will be around $35 million. Once warrants are fully exercised, they will generate gross proceeds of around $38.9 million.
The company will use gross proceeds from the offering in advancing C-Scan clinical development. In the coming months, CHEK is a stock to watch.
Market Reaction:
On Wednesday, CHEK stock fell 15.23% to $1.28 with more than 77.72 million shares, compared to its average volume of 1.63 million shares. The stock has moved within a range of $1.0500 – 1.4500 after opening the trade at $1.06. Over the past 52-week, the stock has been trading within a range of $0.2430 – 4.4900.
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