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Edesa Biotech, Inc. (EDSA) is having a rough morning. The clinical-stage biopharma company's shares dropped nearly 13% in Thursday's premarket trading after it priced a $25 million public stock offering. The move follows an even steeper decline in Wednesday's after-hours session, where shares fell 18.27% to $4.70.
The timing is notable: the company released its Q3 earnings just four days ago, and investors are now digesting the dilution that comes with a fresh capital raise.
Edesa is raising capital by offering 3.87 million common shares and up to 675,000 pre-funded warrants. Each share and warrant comes with an accompanying warrant to buy one common share. The common-share units are priced at $5.50, while the pre-funded warrant units go for $5.4999.
The accompanying warrants have an exercise price of $7.50 and expire after 18 months, or 30 days following the announcement of Phase 2 topline data for EB06 in vitiligo, whichever comes first. Underwriters also have a 30-day option to purchase up to 681,825 additional shares and warrants. The offering is expected to close around Aug. 21.
Proceeds will be used for general corporate purposes, including working capital, R&D, manufacturing, and capital expenditures. Guggenheim Securities is the sole book-running manager.
For those unfamiliar, Edesa is a clinical-stage biopharmaceutical company focused on developing host-directed therapeutics for immuno-inflammatory diseases.
From a technical standpoint, EDSA is trading below its 20-day simple moving average (SMA) of $5.35, its 50-day SMA of $6.23, and its 100-day SMA of $7.85. It's also sitting just below its 200-day SMA at $5.10. That puts the stock in a tricky spot, with resistance overhead and a key longer-term support level to watch.
Despite the recent slide, EDSA is still up 144.10% over the past 12 months. However, it's well below its 52-week high of $20.32, which highlights just how volatile this stock has been. The longer-term trend is positive, but the more recent swing high in June and swing low in July suggest a choppier, headline-driven tape.
EDSA Price Action: As of Thursday premarket, Edesa Biotech shares were down 13.74% at $4.96, according to market data.
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