On July 16th, Aptose or NASDAQ: APTO announced that they will have a public offering of 10.5 million shares at $5.25 per on July 20th.
What does this mean?
Basically, a company will sell shares of their own stock to raise capital in a public offering. This is usually something small-caps go through with if they are not making money or need more capital for operations. In APTO's case, they are running out of cash, and this isn't the first time they've done a public offering. Seeking Alpha mentions that approximately $55 million to be raised in the offering.
What is Aptose Biosciences?
ATPO is a clinical-stage biotech that works in the field of oncology, or treating tumors. Looking at the past 4 years, they have not made a profit like most biotechs because of the amount of spending each company has to undertake in their clinical-trial stages.
Their cash flow looks like the source of their problems. Financing cash flow left at $436,000 in March with all other areas negative except end cash position. The fact that the company is undergoing another public offer must mean that they still haven't gathered enough cash or need a lot more. $55 million should help pad expenses for their CG-806 and APTO-253 clinical trials next quarter or maybe further down the road.
What I think
Since the offering is at $5.25 per share, it's expected to see the price drop. However, there is something I looked at that could be a good sign for Aptose.
Almost 40% of the stock is owned by institutions, and Q2 saw a lot of increases of institutional stakes betting on this company. A good thing about institutional ownership is that it can limit price volatility since it's unlikely smart money will decide to buy up shares and dump it all the next quarter. $22 million bought by institutions also shows investor interest which could mean APTO is getting close to a clinical breakthrough. But that is pure speculation that I made so take that with a grain of salt.
Technicals
The stock looks like it's just about oversold on the 14-Day RSI chart, and price dips under the 200 Day Moving Average after trading above it since November of last year. Patterns on the RSI show that the stock could be gearing for another swing to the upside. If APTO's RSI slides under 30, it could be something to consider buying. On Marketbeat, analysts give this stock a buy rating with an $11.40 Price Target the past two quarters.
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Disclaimer:
Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.
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