After Tuesday's closing bell, the Raleigh, N.C.-based drug developer announced it's commenced a registered direct offering to sell up to $4 million worth of units consisting of Series A preferred stock and warrants. The proposed sale represents substantial dilution to existing shareholders, as the company's market capitalization is around $11.4 million.
The news comes after the two most active trading sessions of 2010 for DARA Biosciences' common shares. Even as the broad market saw thin volumes as the typical lull following the Christmas holiday was exacerbated by the blizzard blanketing the Northeast United States, the stock jumped nearly 75% on Monday to $3.90 with 3.2 million changing hands, far eclipsing its trailing three-month daily average of around 85,000.
That move was followed up by Tuesday's plus 20% pullback to $3.11 on volume of 1.1 million after the company declared effective a previously disclosed shelf registration statement, filing a one-page "notice of effectiveness" with the Securities and Exchange Commission.Tuesday's filing referred back to an amended Form S-1 originally filed on Nov. 12 that provided details of a proposed offering of $4 million worth of preferred stock and warrants representing an additional $4 million worth of common stock. A call to DARA Biosciences for comment on the recent movement in the share price wasn't returned on Tuesday, and a message stated the company was on holiday break this week. In its press release, DARA Biosciences said it plans to use the proceeds of the offering for ongoing development of its lead candidates, working capital and general corporate purposes. DARA Biosciences was last able to raise funds in October when it agreed to sell more than 600,000 units of common stock and warrants to several institutional investors, receiving gross proceeds of $1.4 million. In May, shortly after implementing a 16-for-1 reverse stock split, the company launched an underwritten public offering of $10 million worth of securities but it indefinitely suspended the offering on July 1.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV