Progenity Inc. (PROG) stock prices soared by a massive 28.92% as of the market closing on June 11th, 2021, bringing the price per share up to USD$3.21 at the end of the trading day. Pre-market fluctuations saw the stock surge by another 12.77%, bringing it up to USD$3.62.
Meme Stock Phenomenon
The past several trading days have seen the stock market being dominated by the meme stock phenomenon that spurred the GME and AMC developments earlier in the year. In the absence of any significant news or developments, the recent surge in PROG stock prices is likely to be attributable to the coordinated pump by investors who are users of the popular social media platform, Reddit. With a relatively high percentage of shorted shares, at 6.7%, the company is a prime target for Reddit-driven retail investors.
Private Placement
Concurrent with the surge in stock price, PROG announced on June 10th, 2021 that it had entered into a definitive securities purchase agreement with two leading healthcare-focused investment funds. The agreement will see the sale of units comprised of shares of common stock and warrants. The stocks are interchangeable with pre-funded warrants to purchase common stock and the warrants are for the purchase of common stock.
Details of the Placement
The private placement is expected to result in the generation of gross proceeds amounting to USD$40 million before the deduction of expenses related to the offering. As per the agreement, the closing of the placement will be followed by the issuance of units representing 16,194,332 shares of common stock (or pre-funded warrants. Warrants will also be issues concurrently, which will allow for the purchase of an aggregate of another 16,194,332 shares of common stock.
Pricing of Placement
Each unit issues by PROG will consist of one share of common stock, as well as one warrant to purchase one share of common stock. The price of each combined unit has been set at USD$2.47. Each warrant will have an exercise price of USD$2.84 per share with the option to be exercised at any time within 5 years of the issuance.
Closing of the Placement
The price per unit was partially determined by the average of the last five closing price of PROG’s common stock on the Nasdaq Global Market. Should the warrants be exercise for cash, the company will see the generation of additional gross proceeds of almost USD$46 million. The closing date of the placement is expected for June 14th, 2021, pending the satisfaction of customary closing conditions.
Future Outlook for PROG
Armed with a solid liquidity position from their private placement, as well as the fortuitous surge in value of their equity, PROG is poised to capitalize on the opportunities presented to it. The company is keen to continue its trajectory of success and usher in more organic growth over the long-term. Current and potential investors are hopeful that the management will leverage the resources at their disposal to facilitate significant and sustained increases in shareholder value.
