ContraVir Pharmaceuticals Inc (NASDAQ:CTRV) Loses Momentum on New Dilution

[[tagnumber 0]][[tagnumber 1]]The chart performance of ContraVir Pharmaceuticals Inc (NASDAQ:CTRV) for the first half of October can be divided into two phases – before and after the PO announcement. Needless to say, both periods ended up being quite different from one another.[[tagnumber 2]] [[tagnumber 0]]ContraVir opened this month‘s trade at its Sept. 30 close of $2.09 per share and closed at $2.00. A few days later, i.e on Oct. 5, the company would score a 52–week high of $6.28 after announcing promising preliminary data on its CMX157 product candidate. Based on in vitro studies, CMX157 proved to be 60 times more potent against Hepatitis B than the successful antiviral drug tenofovir, a/k/a Viread, offered by Gilead Sciences. Because of the early stage in which these data showed up, investors‘ enthusiasm did not last long and CTRV closed the Oct. 5 session at $4.72 per share, which was still an 8–week high. A few sessions has passed since then and CTRV has so far failed to keep up.[[tagnumber 2]] [[tagnumber 0]][[tagnumber 6]]In an attempt to ride on the successful news, Contravir‘s managers wasted no time in announcing plans to launch an underwritten public offering of both common stock and warrants to purchase common stock. Two days later, ContraVir revealed the pricing of the offering, giving investors the opportunity to purchase 5 million common shares and warrants for up to 3 million more shares at a combined price of $3.00, or more than 50% lower than the 52–week high reached just two days prior.[[tagnumber 2]] [[tagnumber 0]]While doing public offerings of stock is a natural means for raising fresh capital, it has a downside, as well, and this downside concerns existing stockholders whose stakes get diluted in the end. This is exactly what happened with CTRV and pretty much explains why the positive impact of the preliminary data has now been fully offset against the managers‘ subsequent dilutive move. Yesterday, ContraVir closed trade at $2.43 per share, up 2.5% from the day before when the stock lost a hefty 14%. So where is CTRV headed for right now?[[tagnumber 2]] [[tagnumber 0]]As it is, ContraVir currently has a two–product pipeline in the works, the former being in a 3rd stage trial and the latter, i.e CMX157, in quite an early stage of development. The company‘s FV–100, a prodrug targeted at treating herpes zoster, is currently in a Phase 3 study and has a higher potential to get an FDA ruling sooner rather than later. Until that happens, however, the biotech will most probably continue to issue new stock every now and again to secure the cash needed for further advancement of its product candidates, which means no revenues and no free cash flows just yet. The latter usually has a direct effect on the stock‘s chart performance, at least in the short to mid–term.[[tagnumber 2]]