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This Is Why Heat Biologics Inc. (NASDAQ:HTBX) Dropped 16%

Heat Biologics Inc. (NASDAQ:HTBX)

This Is Why Heat Biologics Inc. (NASDAQ:HTBX)

Shares of Heat Biologics Inc. (NASDAQ:HTBX) fell 16.9% after the biopharmaceutical company priced 5.8 million shares, for a common stock offering. The company has priced the offering at $0.43 a share, slightly below the stock’s current price.

Heat Biologics Inc. (NASDAQ:HTBX)

In addition, the company has granted underwriters a 45-day option for the purchase of up to 872,093 shares of common stock at the public offering price. The company expects gross proceeds of approximately $2.5 million before deduction of underwriting discounts and commissions. The offering should close on or about November 21, 2017.

Heat Biologics Inc. (NASDAQ:HTBX) plans to use the net proceeds from the offering to fund its subsidiaries’ pre-clinical and clinical programs and for working capital and general corporate purposes.

HTBX Investor Reaction

News of the public offering did not go well with current investors as it will dilute their current holdings even though the company tries to use it to shore up its balance sheet. Investors’ confidence in the stock is dropping and threatens to push Heat Biologics Inc. (NASDAQ:HTBX) to its 52-week low of $0.41 a share. Heat Biologics has underperformed the overall industry and is currently down by more than 40% for the year

Despite the underperformance, Griffin analyst Keith Markey remains bullish about the stock’s long-term prospects. The analyst has a ‘buy’ rating on the stock with a share price target of $2.25. The price target represents an upside potential of more than 270%.

“Heat Biologics has developed a T cell activation platform (TCAP) to initiate or enhance an immune attack against solid tumors. [..]As such, we view the Company’s immunotherapies to be far more sophisticated than “vaccines” that also use an antigen-based approach to stimulate the immune system,” said Mr., Markey.

Heat Biologics Q3 Financials

Separately, Heat Biologics Inc. (NASDAQ:HTBX) reported a wider than expected net loss of (-$2.3) million or $0.06 a share, compared to a net loss of (-$1.6) million reported last year. Research and development expense increased 8% to $1.8 million primarily due to Chemistry Manufacturing and Control activities.

During the quarter, the company signed a manufacturing agreement with KBI Pharma that will advance the development of its cancer targeting immunotherapies.

“We had a very productive third quarter, as we achieved a number of important milestones,” said Jeff Wolf, CEO of Heat. “We signed a critical manufacturing agreement to further advance our co-stimulatory programs, and we were also granted a Type C meeting with the FDA to review our Phase 2 clinical trial using our HS-110 for the treatment for non-small cell lung cancer

Heat Biologics Inc. (NASDAQ:HTBX) exited the quarter with cash and cash equivalent of approximately $4.3 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: Monica has an undergraduate degree in Accounting and an MBA she earned – with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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Monica has an undergraduate degree in Accounting and an MBA she earned - with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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