Small-cap drug developer Invion Ltd (ASX: IVX) has seen its share price plunge 24.4% today to be trading at just 3.4 cents. The stock has now declined by a massive 62% since peaking at 9 cents in August 2014.
So What: On Monday, Invion provided an update to the market regarding its INV102 (nadalol) compound which is a potential new inhaled therapy to treat chronic airway diseases such as asthma. It said that it had received approval from the US Food and Drug Administration (FDA) and could thus proceed with further development of the treatment.
While that is good news for the company and its shareholders, Invion has also sought to raise nearly $5 million in cash whilst also concluding an existing short-term funding facility provided by Lind Partners LLC, which it had provided since November 2014. The company is raising $895 thousand through a private placement of 2.5 cents per share which is to be supplemented with a $4.1 million capital raising to local shareholders.
This was being structured as a two-for-seven rights issue, also at 2.5 cents per share. That means that for every seven shares you own, you could have topped up with an additional two. The 2.5 cent price tag represented a 36% discount to its 3.9 cent closing price before having entered its trading halt.
Now What: Of course, Invion isn't the first life-science company to have raised capital recently with Admedus Ltd (ASX: AHZ) and Nanosonics Ltd. (ASX: NAN) both having tapped investors for more cash.
