Immuron share price falls 27% on registered direct offering

After days of consecutive growth, the Immuron Limited (ASX: IMC) share price is falling today following announcement of its registered direct offering. The share price is currently down 27% (at the time of writing) on the news. However, recent days have seen the Immuron share price on a wild ride, up 249% yesterday before today’s falls. Immuron is an Australian biopharmaceutical company focused on developing and commercialising oral medicine for the prevention and treatment of gut mediated pathogens.

Why is the Immuron share price falling?

The Immuron share price is today falling following the announcement that the company is raising US$20 million through a registered direct offering. The company announced it has entered into agreements with several healthcare-focused institutional investors for their participation in a registered direct offering of 1,066,668 American Depositary Shares (ADSs). Each of these ADSs represents 40 of the company’s ordinary shares. The price of these ADSs is $18.75. This is a premium with the company’s US dual listed cousin Immuron Ltd/S ADR (NASDAQ: IMRN) currently trading at US$14.81. However the large drop in the Immuron share price is no doubt due to the considerable dilution of the share value the offering causes. The offering is set to close around 23 July.

Immuron intends to use the net proceeds from this offering to fund its Research and Development and preclinical and clinical programs. The funding is also being used to support marketing initiatives surrounding the company’s flagship product, Travelan, and provide ongoing working capital.

What now for Immuron?

In recent days there has been plenty of news out of Immuron. On Monday, the Immuron share price shot 11% higher after receiving FDA guidance for its new developmental drug. Subsequently in further exciting news, the Immuron share price rose nearly 250% yesterday as its flagship drugs, Travelan and Protectyn, demonstrated antiviral activity against COVID-19 in laboratory testing. It is not surprising today that we are seeing a pull back in the share price as it becomes heavily diluted. While this may be seen as a negative, it can also be seen as investors having confidence in the company moving forward, investing their money at higher prices.