2 Biotech Stocks in Play: Celsion and Chelsea
This has been another exciting week in the world of biotechnology. Several stocks are attracting investor attention, but not all for the best reasons. This article will focus on the developments at Celsion Corporation (NASDAQ:CLSN) and Chelsea Therapeutics (NASDAQ:CHTP).
In late November, I wrote an article in which I warned investors about the history of dilution at Celsion Corporation. Between the end of 2009 and the end of 2012, Celsion more than tripled the existing share count resulting in substantial dilution to the original investors. In 2013, the company registered two secondary offerings; one in February and one in May. Later in the year, management decided that the share count had risen out of control so they decided to do a reverse split, in part because the share price had fallen so low it was no longer attractive to institutional investors.
Let’s fast forward to this morning and once again, Celsion has decided to sell more shares. The company is going to sell 3.6 million shares, which are expected to generate approximately $13.8 million in cash. Two things are suspicious about this capital raise:
- The company notes in the press release that the cash raise will bring the company’s balance to roughly $57 million, which means Celsion had about $43 million prior. Why raise now? What’s the urgency?
- The press release also notes that the funds will be used for general corporate purposes. Really?
Investors should continue to exercise caution here and probably stay away for the time being. It seems like the only news items for Celsion are secondary offerings and Seeking Alpha “pump” articles.