Pluristem Raises Money Through Equity Offering; Will Momentum Continue?

Pluristem Therapeutics (NASDAQ:PSTI) gapped down 15% Thursday morning after an announcement that the company will be raising capital through the sale of $32M in common stock and warrants. The company will sell 8M units – each unit consisting of one share of common stock and a warrant to purchase 0.35 shares of the stock- at $4 a piece. Shares are, however, already rebounding slightly in the late morning as investors are still interested in Pluristem’s proprietary placental cell-based therapies. Shares of the company have more than doubled in the last six months, and closed Wednesday, before the financing announcement, at $4.54. PSTI’s visibility improved drastically in July – average volume more than quadrupled – after a series of bullish articles were published on Seeking Alpha.

On August 30th, Pluristem filed for Orphan Drug Status in treating aplastic anemia with its PLacental eXpanded (PLX) cells, setting the stage for a catalyst if the treatment receives approval in the next few months. The company also commenced with a phase II trial of PLX cells to treat intermittent claudication in August. PSTI should remain weak through the day, however the question is whether or not increased visibility and volume in the last two months will continue after Thursday’s losses. If so, bullish sentiment will help buoy shares relatively quickly. Otherwise, it may not be until PSTI receives orphan drug approval that shares strengthen significantly.