Catalyst Pharmaceuticals (CPRX) Stock Climbs On Cancelled Offering

Catalyst Pharmaceuticals CPRX Stock News

Catalyst Pharmaceuticals Inc (NASDAQ: CPRX) is making a move for the top in the market this morning, gaining more than 10% in the premarket. The gains come after the company announced that it will not be moving forward with a previously-announced offering. Here’s what’s happening:

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CPRX Stock Is Up Big On Cancelled Offering

In a press release issued early this morning, Catalyst Pharmaceuticals announced that it will not be moving forward with a previously announced offering. The offering was announced on Wednesday, September 11, 2019.

In the release, CPRX said that it has come to the conclusion that an offering at the current market price of the common stock is not in the best interest of the company or its investors.

Why This News Is Exciting Investors

At first glance, you may think that this isn’t big news. However, it actually is. The truth of the matter is that the offering announced on Wednesday would have been a dilutive transaction.

Think of CPRX as a massive pie and each share as a slice of that pie. If the company moved forward with the offering, it would be issuing more shares, or slices, but the pie wouldn’t be getting any bigger. That means that everyone with a slice would have had to settle with a smaller figurative snack.

Because Catalyst Pharmaceuticals announced that it won’t be moving forward with the offering, no new shares will be issued, meaning that each figurative slice of pie will stay the same size.

Looking Forward

While the news today was good news for the short term view, the long run is something to think about. The truth of the matter is that CPRX didn’t plan to move forward with a dilutive offering without reason. It needs the money.

At the end of the day, the offering is cancelled, so there will be no money coming in from it. As a result, the company is likely going to need to find another avenue for raising funds in the relatively neare future.

There are plenty of non-dilutive ways to raise funds, but there’s no insinuation as to how CPRX plans to raise the funds it needs. So, keep a close eye on finances and announcements surrounding funds ahead as this will likely shape movement moving forward.

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