Citius Pharma (CTXR) Completes $15 Million Direct Registered Offering

Last night, Citius Pharmaceuticals (CTXR) reported that it had completed its 12.5 million share direct offering, issuing 12.5 million shares at $1.20 per share with attached warrants exercisable at $1.50 per share. In total, the offering generated gross proceeds of $15 million, with net proceeds to Citius of just under $14 million after the $1 million placement agent’s fee.

The warrants are exercisable six months from the date of the offering, which is timed to follow the expected receipt of FDA approval for I/ONTAK. If exercised, the warrants will bring in an additional $18.75 million.

This direct offering appears to address the company’s financing needs for now, extending its ability to operate well into 2024 and possibly into 2025, assuming that the warrants are exercised. The offering also raises the question of the status of the proposed spin-off of I/ONTAK. In a previous post, I had estimated that Citius might seek to raise as much as $50 million by selling shares in a subsidiary that would hold I/ONTAK’s asset and operations. If the company is able to raise nearly $33 million from the direct offering, including the exercise of the warrants, it can at the very least delay the spin-off until such time that I/ONTAK’s financial prospects become clearer, in which case it might obtain a higher valuation for I/ONTAK with less dilution of CTXR’s (and its shareholders’) stake. It might even obviate the need to spin-off the I/ONTAK business especially, especially if the company is able to submit its Mino-Lok remedy for infected central venous catheters to the FDA for approval later this year or early in 2024. In that case, the market may very well be receptive to another direct equity offering by CTXR.

Despite the additional dilution associated with yesterday’s direct offering, the financing is positive news for Citius and its shareholders. It reduces the risk that a market dislocation might have made it more difficult for the company to raise capital at an acceptable price for CTXR shareholders. With the offering behind it, attention will now turn to the FDA’s decision on I/ONTAK, which is expected at the end of July.

May 9, 2023

Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250

© 2015-2024 by Stephen P. Percoco, Lark Research.   All rights reserved.

This blog post (as with all posts on this website) represents the opinion of Lark Research based upon its own independent research and supporting information obtained from various sources. Although Lark Research believes these sources to be reliable, it has not independently confirmed their accuracy. Consequently, this blog post may contain errors and omissions. Furthermore, this blog post is a summary of a recent report published on this subject and that report provides a more complete discussion and assessment of the risks and opportunities of any investment securities discussed herein. No representation or warranty is expressed or implied by the publication of this blog post. This blog post is for informational purposes only and shall not be construed as investment advice that meets the specific needs of any investor. Investors should, in consultation with their financial advisers, determine the suitability of the post’s recommendations, if any, to their own specific circumstances. Lark Research is not registered as an investment adviser with the Securities and Exchange Commission, pursuant to exemptions provided in the Investment Company Act of 1940. This blog post remains the property of Lark Research and may not be reproduced, copied or similarly disseminated, in whole or in part, without its prior written consent.

This entry was posted in CTXR, Health Care and tagged . Bookmark the permalink.