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IsoRay shares tumble on news of secondary offering

Fear of share dilution follows FDA approval of the company's GammaTile therapy for recurrent brain tumors
Cancer cells
IsoRay shares were a third lower in pre-market trade

Shares in the medical technology and biotech group IsoRay Inc (NYSEAmerican:ISR) are down in pre-market trade in the wake of its announcement of a secondary share offering.

IsoRay, which is based in Richland, Washington, has entered into agreements with several institutional investors for the purchase in a registered direct offering of 11mln shares of its stock at a price of US$0.75 per share, to reap gross proceeds of US$8.25mln.

Investors sent shares of IsoRay down 33% to US$0.70 in pre-market trade on the news.

IsoRay intends to use the money from the offering for working capital and marketing purposes.

News of the share dilution follows closely behind the announcement that the US Food and Drug Administration gave the green light to IsoRay’s GammaTile therapy for the treatment of recurrent brain tumors.

GammaTile leverages Celsium-131 brachytherapy seeds’ ability to deliver a highly-targeted dose of intense radiation treatment while limiting radiation exposure to surrounding tissue.

“GammaTile Therapy utilizes Celsium-131 brachytherapy seeds to deliver a fast-acting therapeutic dose to the tumor bed,” said Lori Woods, IsoRay’s interim chief executive officer.

“The unique properties of Cesium-131 have started to revolutionize brain brachytherapy treatment, and Gamma Tile Therapy should help to accelerate the adoption of these procedures,” Woods added.

Now that the FDA has cleared GammaTile, the therapy can be offered at hospitals across the US.

The Centers for Medicare and Medicaid Services have already clarified the coding for GammaTile in a hospital setting by assigning GammaTile therapy to a new ICD-10-PCS code.

As part of its offering, IsoRay has also agreed to issue unregistered warrants to investors to purchase up to 5.5mln shares of stock at an exercise price of US$0.75. The offering is set to close Wednesday, subject to closing conditions.

HC Wainwright is the agent for the offering.

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