Arrowhead Direct Offering Has Only Intermittent Effects

This morning Arrowhead Research (NASDAQ:ARWR) announced a $6.2MM direct offering of common stock and warrants. Shares will be sold to private investors, mostly current shareholders, as well as an undisclosed new healthcare fund. Shares were sold at $2.76 per unit, each unit consisting of one share of common stock and warrant to purchase .75 shares at $3.25 each. Arrowhead develops a variety of drugs based on nanomedicine, including an oncology candidate and an anti-obesity compound.

The sale, which will benefit continued operations and development, may not last as long as necessary; ARWR may need to raise capital within a year. Shares tumbled 10% with the markets’ open, most likely on the low sale price. Investors may feel that if management values the company at $2.76, the markets should reflect that as well. A quick rebound should not be anticipated.