TransCode Therapeutics RNAZ announced that it is floating a secondary issue of around 5.94 million shares of its common stock to the public at an issue price of $1.22 per share, amounting to $7.5 million.

Per the terms of the public offer, the common stock will be accompanied by warrants. Through the issue of warrants, TransCode intends to issue around 11.89 million shares of common stock. The warrants will have an exercise price of $1.22 per share and will be exercisable immediately upon issuance and valid for 3.5 years from the issuance date.

RNAZ plans to use the net proceeds from this new issue and its existing cash balance to support the clinical development of its lead pipeline candidate TTX-MC138 in oncology indications. Management will also use the proceeds for its general corporate purpose, including working capital requirements.

Shares of TransCode plummeted 49.5% on Jan 18 after the announcement. The downtick was likely caused by the issuance of a large number of shares, diluting the company’s current shareholder base. Earlier this week, the company’s 1-for-40 reverse stock split decision came into effect, reducing its outstanding shares count to around 0.63 million. Considering the size of the secondary issue, the current shareholder base will be significantly diluted. The issue price per share also did not go well with investors, which was at a discount to the closing price on Jan 17, with the stock closing at $2.16.

RNAZ’s shares have plummeted 99.8% year to date compared with the industry’s 5.9% fall.

Image Source: Zacks Investment Research

The secondary offering is expected to close by Jan 22, 2024.

TransCode Therapeutics has only one pipeline in clinical development, TTX-MC138, which is being evaluated in a First-in-Human phase 0 study for advanced solid tumors.

This secondary stock offering will strengthen RNAZ’s financial position. Earlier this month, management had said its preliminary cash balance, which stood at $2.8 million as of the end of December 2023, would dry out soon. This new cash inflow will enable management to fund its current business plans and extend the existing cash runway for the next eight months.

TransCode Therapeutics Inc. Price

 

TransCode Therapeutics Inc. price | TransCode Therapeutics Inc. Quote

 

Zacks Rank & Stocks to Consider

TransCode carries a Zacks Rank #3 (Hold) at present. Some better-ranked stocks in the overall healthcare sector include CytomX Therapeutics CTMX, Novo Nordisk NVO and Sarepta Therapeutics SRPT. While CytomX and Novo Nordisk sport a Zacks Rank #1 (Strong Buy), Sarepta carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.