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Check-Cap Ltd. (CHEK) Stock Plunged 34.65% Today, Here’s Why

Check-Cap Ltd. (CHEK) stock plummeted 34.65% in the current-market trading session at the price of $0.40 following a $10 million registered direct offering.

CHEK is a medical diagnostics firm aiming to transform CRC screening by introducing C-Scan. Its capsule-based disruptive screening technology helps millions of individuals to remain healthy via preventive CRC screening. C-Scan is the first and only preparation-free screening test to detect polyps that helps in the timely intervention and prevention of colorectal cancer.

CHEK Reported $10M Direct Offering

On 1st March 2022, CHEK announced entering into definitive deals with multiple institutional investors. The agreement aims to purchase and sell 20 million of CHEK’s common shares and warrants to buy roughly 15 million of its shares in a direct offering. Each share has offered to buy 0.75 common shares at a combined offering price of US$0.50 per share. The registered direct offering will close on 3rd March 2022 and is subject to customary closing conditions.

The offered warrants have an exercise price of US$0.65 per common share. They are exercisable immediately and will expire five years after the issuance. Additionally, CHEK agreed to reduce the exercise price to US$0.65 per share for certain warrants issued in July 2021 to buy 18 million common shares. The term of exercise had also prolonged to 2nd January 2025.

CHEK expects to receive gross proceeds of US$10 million from this offering before subtracting the agent’s fees and other offering costs. The company plans to utilize the net proceeds to support the clinical development of C-Scan and for its corporate purposes. The securities were offered under a shelf registration statement on Form F-3 filed with the SEC on 28th January 2022 and became effective on 7th February 2022.

FDA Approved IDE Application

Earlier on 7th February 2022, CHEK reported acquiring approval for its Investigational Device Exemption application from the food and drug administration. Following the FDA approval, the company can now initiate U.S. pivotal study. This study is composed of two different parts. The first part facilitates further calibration of the technique for the average risk population of the United States. The second one contains a randomized and statistically powered study to compare C-Scan results with conventional colonoscopy.

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