Shares of Second Sight Medical Products (EYES) slumped on Wednesday after the visual prosthetics company unveiled a $27.9 million private placement of common stock.
Second Sight said it and accredited investors definitively agreed on the placement, which will generate gross proceeds of $27.9 million before deducting offering expenses.
Second Sight will issue 4.65 million common shares at $6 each. The placement is expected to close on March 26, subject to customary conditions. Second Sight said it would use the funds for working capital.
Such issuance dilutes current stockholders, and that tends to depress a company’s stock.
The Sylmar, Calif., company, which develops implantable prosthetics to provide vision to the blind, recently traded at $8.76, down 20%.
They have traded on Wednesday as low as $8.28, down 25%. At the same time, the stock in September was trading at a 52-week low 69 cents.
In addition to the private placement, Second Sight said in a Securities and Exchange Commission filing that Pixium Vision objected to the stock sale.
Second Sight in January had agreed to combine with Pixium and, as a condition, said it wouldn't issue any shares before the closing unless Pixium agreed, the filing says.
Thus, Second Sight said that if it closes the placement, it might face a legal dispute with Pixium.
And Second Sight said it and Hudson Bay Capital Management agreed to terminate an offering of Second Sight preferred shares and warrants.
Second Sight will pay Hudson Bay $1.35 million and reimburse it an additional $50,000 of legal fees to scrap the deal. They had agreed to the deal in March.
The had stock skyrocketed earlier this month after the U.S. Food and Drug Administration cleared the company's Argus 2s retinal prosthesis to treat retinitis pigmentosa.
RP is a rare genetic disorder that involves the breakdown and loss of cells in the retina of the eye. It causes vision loss that worsens over time and can eventually lead to blindness.
The Argus 2s is a set of external hardware, glasses and a video processing unit that will all be part of a larger visual prosthesis system that is also currently under development.