May 18, 2011

Celldex Announces Vague Dilution

Celldex (CLDX) filed a shelf registration to issue more shares with no numbers placed inside the document, in what I consider to be extremely 'odd' behavior and a highly risky practice. They have had some 575,000 new shares issued via Cantor Fitzgerald from January through recently raising about $ 2.4 Million dollars. Note that they had up to 5 million shares to sell until May 16, 2011 and claim to have sold only 575,000.

Update: This morning (on May 18) Celldex issued a new release stating the price of the offering at $3.15 - a huge discount to the market price of $3.88. Link

Among many risk factors listed the one useful item for biotech/pharma investors is the clear listing of their competitors. Maybe one could spread your bets across the field at other GOOD companies too!

We have many competitors in our field, and they may develop technologies that make ours obsolete.
Biotechnology, pharmaceuticals and therapeutics are rapidly evolving fields in which scientific and technological developments are expected to continue at a rapid pace. We have many competitors in the U.S. and abroad. The competitors for which we are aware have initiated a Phase 3 study or have obtained marketing approval for a potentially competitive drug include Alexion, Agenus, Baxter, Dendreon, Eli Lilly, GlaxoSmithKline, ImmunoGen, Merck, Northwest Biotherapeutics, Pfizer, Roche, Sanofi-Aventis, Seattle Genetics, and Takeda. Our success depends upon our ability to develop and maintain a competitive position in the product categories and technologies on which we focus. Many of our competitors have greater capabilities, experience and financial resources than we do. 

Disclosure: I am long Aug $5 calls and I was debating about shorting yesterday for a short term gain - but I did NOT.haha, missed out on this opportunity!

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