TapImmune Inc. (OTCMKTS:TPIV) Remains Volatile
On June 23 the stock of TapImmune Inc. (OTCMKTS:TPIV) logged its new 52-week high of $1.71 per share. Since then however the ticker has been able to register only 6 sessions ending in the green. After wiping another 9.6% last Friday the stock currently sits at $0.75. Compared to the June high the company has lost 56% of its value.
The downtrend may seem rather puzzling though. Last month the company announced some extremely positive results from the Phase I HER2/neu Breast Cancer vaccine clinical study. Previously the company announced the results from the successful Phase I trial on a Folate Receptor Alpha Vaccine in ovarian and triple negative breast cancer. This means that TPIV now have multiple Phase II clinical study candidates. So what could explain the stock’s fall towards the bottom of the chart?
Well, in order to fund their drug programs TPIV have been resorting to outside sources of capital. Back in March 12,320,000 investment units were sold at $0.20 per unit. Each unit consisted of one common stock and one warrant from each series – A-1, B-1, C-1, E-1, D-1. The exercise price of these warrants ranged from $0.40 to $1.50.
Quite a reasonable pricing considering that back then TPIV were trading at less than 30 cents per share. The terms of the first three series of warrants got amended though and their exercise prices were reduced significantly. The Series A/A-1 warrants could now be exercised at $0.10 down from $1.50, the B/B-1 warrant were down to $0.20 from the initial $0.40 while the C/C-1 warrants were amended to have an exercise price of $0.50 down from $1. With such massive reductions it shouldn’t be such a surprise if the people who own the warrants decide to turn them into shares. And indeed, last month 5 million C-1 warrants were exercised and as a result 5 million fresh shares got issued.
The effects of the dilution resulting from the exercise of the warrants should not be underestimated. TPIV had only 32.6 million outstanding shares and if more warrants get exercised the ballooning share count could impact the movement of the stock rather negatively.
Unlike the majority of other pennystock however TPIV are getting some sizable proceeds from the warrants which the company plans to use in support of its Phase II trials. When TapImmune announce the launch dates of the clinical studies the stock could once again rally and surge up the chart. Until then the possibility of more shares seeing the light of day at prices considerably lower than the market price could keep driving the stock down. That is why deciding on appropriate time horizons and doing your own due diligence should precede any trades involving the ticker.
In early trading today TPIV are still falling currently trading over 5% in the red at $0.71.
