Why Bioamber Inc (NYSE:BIOA) Stock is Plummeting

Bioamber Inc (NYSE:BIOA)

Bioamber Inc (NYSE:BIOA)

Bioamber Inc (NYSE:BIOA) stock is down over 45% today after the company announced an underwritten public offering. The offering will include 14,666,667 shares of common stock with warrants attached that could, if exercised, double that figure. Excluding stock options, warrants, and employee-based bonus plans, as of June 30, 2017, the number of outstanding shares was 37,142,830. Existing shareholders will have their equity diluted by around 29%, excluding other potential share sales or option/warrant exercises.

Shareholders of Bioamber Inc (NYSE:BIOA) have had a rough week. On Friday, August 4, BIOA shares lost over 32%. On Monday that was followed by shares dropping almost 35%, and today shares have lost over 45%. YTD, shares have dropped over 85% and have obliterated the previous 52-week low of $0.96 – at last glance, BIOA shares are trading around $0.53. Volume for the biotech company is very heavy – over sixty times the 30-day, daily average.

Bioamber Inc (NYSE:BIOA) is an industrial biotechnology company. It produces and sells bio-succinic acid to various chemical market customers in North America. Bioamber’s proprietary technology processes combines industrial biotechnology and chemical catalysis to convert renewable feedstocks into chemicals that can act as replacements for petroleum-derived chemicals. The company’s bio-succinic acid is used in various applications, including plasticizers, polyurethanes, personal care products, resins and coatings.

Bioamber Inc (NYSE:BIOA) priced the underwritten public offering which includes 14,666,667 shares of common stock of the Company and warrants to purchase up to 14,666,667 shares of common stock of the Company at a price to the public of $0.75 per share and associated warrant. The warrants have an exercise price of $0.75 and a term of five (5) years, exercisable upon the date of issuance. The aggregate gross proceeds to the Company (assuming no exercise of the warrants) are US$11 million , before deducting underwriting discounts and commissions and estimated offering expenses.

Bioamber Inc (NYSE:BIOA) has granted to the underwriters a 30-day over-allotment option to purchase up to an additional 2.2 million shares of common stock and/or warrants to purchase up to 2.2 million shares of common stock. Potential proceeds to Bioamber are approximately $1.65 million (assuming no exercise of the warrants) before deducting underwriting discounts and commissions and estimated offering expenses. In the event the Over-Allotment Option is exercised in full, the aggregate gross proceeds to the Company (assuming no exercise of the warrants) will be approximately $12.65 million.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

Author: Steve Clark

Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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