Check-Cap Ltd. (CHEK) stock prices were down by 19.5364% some time after market trading commenced on June 30th, 2021, bringing the price per share down to USD$1.2150 early on in the trading day.
Registered Direct Offering
The company announced on June 30th, 2021 that it had entered into various definitive agreements with institutional and accredited investors. As per the agreement, the company would put up 25,925,926 ordinary shares of the company for sale, along with warrants to purchase up to the same number of ordinary shares. The registered direct offering is seeing each ordinary share being sold in conjunction with one short-term warrant to purchase one ordinary share at a combined offering price price of USD$1.35 per ordinary share and accompanying warrant.
Share Warrants
The short-term warrants will have an expiry date of two and a half years following the date of issuance and will be exercisable immediately with an exercise price of USD$1.50 per ordinary share. The closing of the registered direct offering is expected to close on July 2nd, 2021, pending the satisfaction of customary closing conditions.
Capital Generation
CHEK forecasts generating roughly USD$35 million in gross proceeds from the offering, before the deduction of expenses related to the offering. This number does not include proceeds received from the exercising of warrants, the full exercising of which will generate additional gross proceeds of roughly USD$38.9 million before the deduction of offering-related expenses. The capital generated from the offering is planned on being allocated towards advancing the ongoing clinical development of C-Scan, including the company’s upcoming U.S pivotal study.
Manufacturing Hickups
Technical issues with a single source supplier resulted in delays in manufacturing, but the company continues to develop and expand its entire production process in order to meet its target manufacturing capacity. Consequently, the company forecasts delays in its clinical trials, at the forefront of which is the U.S. pivotal trial which has an updated commencement date in the first quarter of 2022. The company is continuing to scale its manufacturing up to support the upcoming clinical trials once production returns to normal.
Future Outlook for CHEK
Armed with an influx of capital generated from its registered direct offering, CHEK is poised to initiate clinical trials that the company hopes to see through to commercialization. Investors are keen for the company to resume normal manufacturing and allocate resources efficiently, so as to ensure maximum possible growth and increases in shareholder value.
