|Rexahn surprises investors with timing of financing announcement|
|Monday, 28 March 2011 23:41|
Investors in Rexahn Pharmaceuticals (Amex: RNN) were shocked after the company announced Monday that it had received commitments from certain institutional investors to purchase an aggregate of $10 million of Rexahn’s securities in a registered direct offering which raised the company $9.45 million.
Shares were temporarily halted, and after trading resumed, the news sent shares of the company down over 24% to a close after regular trading at $1.07. After hours, the shares traded higher to $1.12 up 4.67% higher.
Part of the surprise felt by shareholders came due to the fact that during the recent ROTH Capital Partners OC Growth Stock Conference in California, the company had told a group of investors during a presenation that the company was anticipating an additional investment from Teva Pharmaceutical (Nasdaq: TEVA), That investment money is supposed to come as part of their on-going mutual agreement with respect to the commercialization and development of RX-3117, under which on September 16, 2009 Teva agreed to purchase shares of Rexahn's common stock for $3.5 million. Teva Pharmaceuticals had upped its investment in Rexahn to 6.3 percent in January and rumors among Wall Street brokers and traders had RNN ready to announce the additional investment in the days ahead. That news announcement may still be coming into play, according to our sources.
In addition, several analysts who cover the company closely continue to expect that RNN shares will be trading in ranges multiple times higher after the company completes key clinical trials (in September?) and resumes negotiations with Big Pharma for a partnering/licensing deal sometime during the 4th quarter.
RNN shares have been in a down-trend, recently, and investors had been treading cautiously after founder and CEO Dr. Chang Ahn announced that he would relinquish the chief executive title and serve as the company’s chief science officer and chairman- a move favored by some insiders given Dr. Ahn's strengths in the laboratory, versus the dais.
Rexahn expects to name a replacement for Ahn by September and sources tell BioMedReports that several distinguished candidates with experience negotiating drug licensing agreements have been already been interviewed for the job. The perceived fragile and uncertain state of the company, is another reason why the investment community feels the timing of today's announcement could not have come at worse time.
Rexahn is developing a robust late-stage portfolio of drugs for cancer, sexual dysfunction and nervous system disorders- including three experimental drugs in critical Phase II clinical trials.
We will keep you posted as the story develops and we get further information.