Dividend Stocks

Why Is PaxMedica (PXMD) Stock Down 40% Today?

PaxMedica (NASDAQ:PXMD) stock is cratering today after the company announced a $7 million public offering. The offering consists of 5.38 million shares and warrants to purchase up to 5.38 million shares. These warrants will be immediately exercisable upon issuance at an exercise price of $1.30 and an expiration date of five years after issuance. H.C. Wainwright & Co. will serve as the sole placement agent for the offering. Furthermore, PaxMedica expects the offering to close on or about Nov. 22.

Before accounting for agent fees, gross proceeds are expected to be $7 million. These proceeds will be used toward paying off PaxMedica’s convertible promissory note held by Lind Global Fund II LP, for moving forward with its development program and for other general corporate purposes.

PXMD Stock: PaxMedica Sinks on $7 Million Offering

Shareholders aren’t reacting positively to the offering, as it will dilute PXMD stock. Meanwhile, shares of the company are hovering dangerously close to the pivotal $1 level, despite the company enacting a 1-for-17 reverse stock split that became effective on Oct. 30.

Its unclear whether the reverse stock split helped PaxMedica regain compliance with Nasdaq’s minimum price requirement of $1. Today, the company remains on the Nasdaq’s Noncompliant Companies list. Nasdaq will mark a stock as noncompliant if it closes under $1 for 30 consecutive business days. Compliance can be regained if a stock closes at or above $1 for at least 10 consecutive business days, but generally no more than 20 consecutive business days.

Last week, PaxMedica reported its earnings results for the period ended Sept. 30. The company disclosed a cash reserve of $1.2 million and access to $14.4 million from its committed equity investment agreement with Lincoln Park Capital.

“The accomplishments in the third quarter of 2023 represent significant progress in our journey towards a 2024 US FDA filing of an NDA for the treatment of HAT with PAX-101 (IV suramin),” said CEO Howard Weisman in the report. “The favorable results from our retrospective HAT-301 study reinforce the substantial benefits of suramin in treating this life-threatening infection.”

For the quarter, the company reported $0 in revenue and a net loss of $5.04 million. The net loss equates to a diluted net loss per share of $5.20.

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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.