The Dimerix Ltd (ASX: DXB) share price has sunk well into the red from the opening of trade on Tuesday.
Dimerix shares are on the way down as the company advised it had lodged a prospectus with the Australian Securities and Investment Commission (ASIC).
Let's investigate further.
Image source: Getty Images
A quick refresher on Dimerix
Dimerix is a clinical-stage drug development company. Its lead clinical program is investigating the use of the company's DMX-200 treatment in chronic kidney disease (CKD).
In addition, Dimerix is developing DMX-200 for applications in chronic and acute respiratory disease, and another kidney condition known as focal segmental glomerulosclerosis (FSGS).
As a result of its efforts, Dimerix has a market capitalisation of $67.65 million at the time of writing.
What did Dimerix announce?
Dimerix advised its prospectus contained an offer of a share purchase plan (SPP) that gives "each eligible shareholder" the opportunity to apply for "up to $30,000 worth of new (Dimerix) shares".
In addition, the securities are issued at a price of 20 cents per share. As such, this offer represents the same price as the 2-tranche placement of about 100 million shares last week. The Dimerix share price rocketed 50% on the news of the successful capital raise and the release of the company's full 2021 financial year results.
Moreover, eligible shareholders will receive "one free unlisted option for every two shares issued under the placement". This option is exercisable at 40 cents per share, and has an expiry date of July 2024.
Further, it is extending the same option to its SPP, naming it the "SPP Option".
The proceeds from both the SPP and the placement will be used for working capital, debt repayment and to finance clinical studies in FSGS patients.
Moreover, it will also use the funds to establish manufacturing and distribution channels to conduct further clinical studies. This makes sense, as it can cost up to $1 million for an 8-patient study in some instances.
Investors have punished the company on the back of this update today. Dimerix shares are now exchanging hands at 30.5 cents apiece, a 10.29% dip on the day.
Dimerix share price snapshot
The Dimerix share price has climbed 32% this year to date. Despite this, it has posted a loss of 50% over the past 12 months.
In the last month, Dimerix shares have stepped a further 24% into the green.
This has lagged the S&P/ASX 200 index (ASX: XJO)'s gain of about 23% over the past year.
