Investors to convert preferred shares and exercise warrants
NEW HAVEN, CT, (March 22nd, 2018) – Specialty cancer diagnostics company Precipio, Inc. (NASDAQ: PRPO), in an 8-K issued today announced an agreement with investors in certain 2017 underwritten and registered direct offerings, to convert their preferred shares and exercise a substantial portion of their warrants.
The benefit to common stockholders of the restructuring is the elimination of the preferred class and the bulk of warrants along with accompanying preemptive rights including ratchets, which restricted access to capital.
Preferred capital raises
In August 2017 Precipio completed its first post-merger capital raise of $6 million of preferred shares, with a follow on raise of $2.75 million of the same preferred shares in November 2017. As disclosed, these preferred shares had a full anti-dilution ratchet price protection, as well as 100% warrant coverage.
Each subsequent raise conducted by Precipio triggered the repricing of those shares and warrants, resulting in further dilution to shareholders.
On Tuesday, March 20th, Precipio issued an announcement that led to a substantial one-day closing share price appreciation from $0.49 to $0.90 (an increase of approximately 87%), as well as significant volume exceeding 26 million shares.
This created conditions favorable for Precipio and investors to enter into an agreement to discharge the preferred shares and exercise corresponding warrants which will leave the company with a cleaner cap table, unlocking access to lower cost capital due to the absence of a conversion or exercise price ratchet adjustment.
“The news release of an exciting product followed by today’s transaction eliminates a significant overhang resulting from financings in 2017, and allows us greater financial flexibility in commercializing our industry-leading pathology and diagnostics products and services,” comments CEO Ilan Danieli. “A streamlined balance sheet is critical to growing the company and creating shareholder value to our common stockholders; this agreement could not have come at a better time.”
Precipio has built a platform designed to eradicate the problem of misdiagnosis by harnessing the intellect, expertise and technology developed within academic institutions and delivering quality diagnostic information to physicians and their patients worldwide. Through its collaborations with world-class academic institutions specializing in cancer research, diagnostics and treatment such as the Yale School of Medicine and Harvard’s Dana-Farber Cancer Institute, Precipio offers a new standard of diagnostic accuracy enabling the highest level of patient care. For more information, please visit www.precipiodx.com.
Certain statements in this press release constitute “forward-looking statements,” within the meaning of federal securities laws, including statements related to ICP technology, including financial projections related thereto and potential market opportunity, plans and prospects and other statements containing the words “anticipate,” “intend,” “may,” “plan,” “predict,” “will,” “would,” “could,” “should,” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. Factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include the known risks, uncertainties and other factors described in the Company’s definitive proxy statement filed on May 12, 2017, the Company’s Quarterly Reports on Form 10-Q for the quarters ended June 30, 2017 and September 30, 2017, the Company’s prior filings and from time to time in the Company’s subsequent filings with the Securities and Exchange Commission. Any change in such factors, risks and uncertainties may cause the actual results, events and performance to differ materially from those referred to in such statements. All information in this press release is as of the date of the release and the Company does not undertake any duty to update this information, including any forward-looking statements, unless required by law.