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Why the Telix Pharmaceuticals share price slumped on Wednesday

The Telix Pharmaceuticals Ltd (ASX: TLX) share price closed 4.2% lower on the ASX yesterday as the Aussie pharmaceuticals group completed a $40 million private placement and announced a $5 million Share Purchase Plan.

Why did the Telix share price fall?

After emerging from its trading halt during yesterday’s trade, Telix announced the successful completion of a heavily oversubscribed private placement to professional and sophisticated investors.

The company placed 30.8 million new, fully paid ordinary shares at $1.30 per share to raise $40 million before costs, which was made to new and existing investors within the company’s placement capacity under ASX Listing Rules.

The placement price represented a 9% discount to the 10 day volume weighted average price (VWAP) of Telix shares on the ASX as at close of trading on 12 July 2019.

Given the discounted placement price, investors reacted by discounting the company’s equity with its closing price of $1.60 per share still trading above the $1.30 placement price.

Telix also announced that it will offer existing shareholders the opportunity to participate via a Share Purchase Plan (SPP) to raise a further $5 million in cash for the group.

What will Telix do with the extra cash?

Telix is a clinical stage biopharmaceuticals company which focuses on the development of diagnostic and therapeutic products based on targeted radiopharmaceuticals or “molecularly targeted radiation” (MTR).

The extra money raised will be applied to the company’s commercial and clinical programs including completion of European clinical activity for prostate imaging (TLX591-CDx) to support a European Union (EU) marketing authorisation.

Also on the agenda for the Aussie pharma group are:

  • Commercial scale manufacturing and Biologics License Application (BLA) preparedness for renal cancer imaging (TLX250-CDx)
  • Commencement of Phase III clinical activity in Australia for prostate therapy (TLX591)
  • Commercial launch of TLX591-CDx, branded as illumetTM, in the United States
  • Pipeline and indication expansion
  • Working capital requirements

While the Telix share price fell 4.2% on the news yesterday, the share price has still surged a whopping 146% higher in 2019 alone having hit a new 52-week high of $1.67 as at Friday afternoon’s close.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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