$5 Million Securities Purchase Agreement Causes Buying Frenzy

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Tuesday, July 12, 2022

When a company announces a capital raise through the issuance of equity, there are sometimes adverse effects to the stock price as many fear dilution. This is typically the case if the offering isn’t very favorable terms for the company. However, on the flip side, there are offerings that cause great optimism for the company in question. This is sometimes the case if the share price in the offering is higher than the current market price at the time of the close of said raise, or if the company has very specific uses for the proceeds that get investors excited. The latter is what happened on Tuesday after Histogen Inc. (Nasdaq:HSTO) announced that it has entered into a securities purchase agreement with a single healthcare-focused institutional investor. 

Histogen Inc is a clinical-stage therapeutics company focused on developing proprietary hypoxia-generated growth factor technology platform and stem cell-free biologic products as potential first-in-class restorative therapeutics that ignite the body's natural process to repair and maintain healthy biological function. Under its biologics technology platform, the product candidates in development are HST-003, a treatment for joint cartilage repair, and HST-004, a treatment for spinal disc repair. It also has a pipeline of clinical and preclinical small molecule pan-caspase and caspase selective inhibitors focused on treatments for infectious and inflammatory diseases that the company intends to develop.

The release went on to say that the issuance will consist of “1,774,309 shares of common stock (or pre-funded warrants in lieu thereof), Series A warrants to purchase up to an aggregate of 1,774,309 shares of common stock and Series B warrants to purchase up to an aggregate of 1,774,309 shares of common stock, at a purchase price of $2.818 per share of common stock (or pre-funded warrant) and associated warrants” for expected proceeds of around $5 million. This sent traders into a buying frenzy as shares rallied up to $4.76/share (+61.36%) at the session high. 

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