Shares of agricultural biotech Ceres Inc. fell more than 20 percent Wednesday on news of a low pricing for its secondary offering.
The Thousand Oaks firm intends to sell 20 million shares at a price of $1 per share. The company expects the offering to bring in about $20 million in proceeds, before deducting underwriting discounts and commissions. Ceres intends to use the funds from the offering for general corporate purposes, including working capital.
The offering is expected to close on or about March 10. Aegis Capital Corp. of New York is acting as the sole book-running manager of the offering.
Pavel Molchanov, an analyst that covers the company for St. Petersburg, Fla. brokerage Raymond James & Associates Inc., told the Business Journal Wednesday that Ceres needed to price low to attract unsure investors.
“The market's skepticism about the business meant that a sizable discount on the share price was necessary to draw in investors,” he said. “The good news is that this equity raise sets up the company to continue operating well into 2015. But ultimately the key question for investors is how the growth of plantings will look like.”
Ceres is among a handful of companies developing genetically modified sweet sorghum seeds to harvest ethanol. The company has contracts with mills in Brazil.
The company has struggled in recent years as demand for its sorghum seeds have been less than anticipated, prompting Ceres to announce in October it would lay off about 20 percent of its workers. The company has yet to report a profit since going public in February 2012.
Shares closed down 26 cents, or 20 percent, to $1.02 on the Nasdaq.