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The latest: Kintor Pharmaceutical Ltd. (OTCPK:KNTPF, 9939.HK) announced on Sunday that it will place 42 million shares, representing approximately 10.3% of its enlarged capital after the issue. It will sell the shares for HK$12.94 each, representing a discount of nearly 10% to last Friday’s close of HK$14.34.
Looking up: The company will raise HK$509 million ($65 million) from the issue, which it will use for the clinical development and commercialization of three core drugs in China and globally, including the oral Covid drug Pruxelutamide.
Take Note: Pursuant to the placement agreement, the company’s co-founder, Chairman and CEO Tong Youzhi first sold 42 million of his own shares to the new buyers. The company will then sell 40 million new shares to him at the issue price. That means Tong reduced his shareholding in the company by 2 million shares.
Digging Deeper: Kintor mainly produces anti-cancer drugs, but last year developed an oral drug Pruxelutamide for the treatment of Covid. In April this year, it announced a clinical trial showed the drug was effective in reducing hospitalization and mortality rates, spurring a 230% jump in its stock price. However, the company’s R&D costs for the first half of this year alone have jumped 63.5% to 461 million yuan ($66 million), and it recorded a net cash outflow of nearly 600 million yuan. That left it with only 337 million yuan in cash and cash equivalents at the end of June, making it necessary to raise the capital through this share placement.
Market Reaction: Kintor’s shares plunged on Monday and closed down 12.3% at HK$12.58 by the midday break, falling below the HK$12.94 share placement price. The stock now trades at the lower end of its 52-week range.
Disclosure: None.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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