StemCells Drops on Heavy Volume

PALO ALTO, Calif. (TheStreet) -- StemCells (STEM Quote) shares tumbled Wednesday on above-average volume after the biotech company announced it intends to sell 10 million shares of common stock.

StemCells said it will raise approximately $12.5 million in gross proceeds through the sale of approximately 10 million shares of its common stock to selected institutional investors at a price of $1.25 a share. The investors will also receive warrants to purchase approximately 4 million shares of common stock at an exercise price of $1.50 a share.

In total, StemCells expects to receive proceeds, net of offering expenses and placement agency fees, of approximately $11.9 million, which will be used for general corporate purposes, including working capital, product development and capital expenditures, as well as for other strategic purposes.

Shares of StemCells were falling by 24 cents, or 16.9%, to $1.18. Earlier in the session, the stock touched an intraday low of $1.16. More than 4.4 million shares changed hands by 12:15 p.m. EDT Wednesday, compared to the stock's 50-day average daily volume of 1.2 million, according to the Nasdaq.

StemCells has a 106.9 million-share float with a short interest float of 6.8% as of Sept. 25, according to Yahoo! Finance. Insiders hold only 0.9% of the company's shares, with another 15.9% owned by institutions.

-- Written by Robert Holmes in New York.

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