What happened
Shares of Pulse Biosciences jumped 20.6% on Thursday when the company entered into an agreement to sell more than 3 million shares to billionaire Robert Duggan, who is Pulse’s board chairman, at $16.40 per share.
The move cancels $41.6 million in debt Pulse owed to Duggan, and he goes from 46% ownership of the company to a controlling 51%. The stock climbed 20.6%, opening at $17.25, and closed at $20.82 after rising as high as $24.40 during the day.
So what
Duggan’s purchase helps the company’s balance sheet considerably. As part of the private placement, Duggan agreed to invest an additional $8.4 million in the company, so the total deal is worth $50 million.
In the first quarter, Pulse lost $18.6 million and reported it had $59.8 million in cash. The company just got clearance this year from the Food and Drug Administration, approval in Europe, and from Health Canada to market its CellFX System for dermatologic procedures. CellFX uses nano-pulse stimulation to treat skin lesions, removing problem skin tissue to allow new skin layers to grow.
Now what
Investors will be buoyed by the signals Duggan is sending. The company’s first revenue numbers next quarter will be a better indication of what the stock will likely do in the long term, but Duggan’s move allows investors to be a bit more patient with Pulse as it hopefully becomes profitable this year or next.
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