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BG Medicine (BGMD) Stock Plunges as Market Corrects for Pricing of Public Offering

By  +Follow April 3, 2014 10:47AM
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Shares in small-cap health care company BG Medicine (BGMD) plunged Thursday after the company priced the 6.45 million shares it plans to sell in a public offering.

The announcement, which came prior to the opening bell, led to the stock gapping down over 14 percent to $1.65 once markets opened. Shares continued to decline during morning trading, eventually settling at about $1.60 apiece.

It’s hard to view the big decline as a vote of no-confidence in BG Medicine from the markets. Shares are still trading hands at a value above the newly priced stock offering. What’s more, the public offering represents a significant increase in the size of BG Medicine’s float. Currently sitting at just under 28 million, the float would increase 23.1 percent to 34.372 million shares, and that’s not factoring in the 967,800 additional shares being held back for over-allotments.

This injection of liquidity becomes all the more important when one considers the high rate of insider ownership, which may have already resulted in pent-up demand driving big price swings. Insider ownership exceeds 40 percent of the float and has increased by more than 25 percent over the last half-year. As a result, one can roughly calculate that the free float for BG Medicine is set to increase by anywhere from 38.9 percent to 44.8 percent, resulting in a major injection of liquidity into the stock.

With this sort of boost in the total number of shares, combined with the pricing at $1.55 for the new shares, the day’s losses would appear to represent markets simply resetting their valuation for the new shares rather than showing any real concern about BG Medicine’s future.

BG Medicine has shown growing revenues, year-over-year, since 2010, and recently got a new vote of confidence in its BGM Galectin-3® Test from the Centers for Medicare and Medicaid Services (CMS) raised the national limitation amount (NLA) for the test, which has demonstrated the potential to substantially reduce the readmission rate of patients suffering from heart failure in studies.

BG Medicine already made big gains this year on a strong earnings report, and its potential for future earnings appears to be relatively strong. The sale of $10 million in new stock is expected to net $8.9 million for BG Medicine, potentially more if the over-allotments are all ultimately distributed, which the company plans to spend on commercializing its cardiac diagnostics tests, building the clinical case for its tests, and developing its product pipeline.

The public offering is expected to close by April 8, with underwriter Lazard Capital Markets LLC offering the over-allotment shares for an additional 30 days afterwards.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for BGMD
Paul Henry
30 Aug 15 23:20:05
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Michael James
30 Aug 15 23:19:08
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Michael Cook
30 Aug 15 23:16:39
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MoneyTrading
30 Aug 15 16:13:07
*Review* http://t.co/jj6fANqIWw This Tim Sykes DVD is gold! $BGMD $IMRS $DRRX $VUZI $CRMD #stocks #trading
Ben
30 Aug 15 00:00:33
$BGMD via @Portfolio http://t.co/Sg0wbAq7Qh
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29 Aug 15 15:51:03
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29 Aug 15 15:50:06
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nasdaqfan
29 Aug 15 15:47:38
TNA Direxion Daily Small Cap Bull 3x Shares Yield http://t.co/gKne65MMeI $TNA $BGMD $JCP $USO #TNA #stockmarket #finance
nasdaqfan
29 Aug 15 15:47:38
TNA Direxion Daily Small Cap Bull 3x Shares Yield http://t.co/qqzuqLzvm4 $TNA $BGMD $JCP $USO #TNA #stockmarket #finance
PolgarStocks
29 Aug 15 15:45:04
PG Procter & Gamble Co. Day Low http://t.co/KtqEtRmVUq $PG $JPM/WT $BGMD $IBM #PG #stock #stocks
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29 Aug 15 15:44:34
PBR Petroleo Brasileiro (Petrobras) Chart http://t.co/XofGWsGkd0 $PBR $SRNA $RUBI $BGMD #PBR #stock #tradeideas
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29 Aug 15 15:34:38
DIS Walt Disney Co. Tick http://t.co/mHUYjQGoYf $DIS $BGMD $XLP $FEGR #DIS #finance #nasdaq
clayton
29 Aug 15 15:33:10
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29 Aug 15 15:33:04
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29 Aug 15 15:33:04
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Investors Hangout
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29 Aug 15 15:32:56
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29 Aug 15 15:32:38
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29 Aug 15 15:31:12
ADI Analog Devices, Inc. P/E Ratio http://t.co/UT4HG2cWPa $ADI $BGMD $IGN $DUST #ADI #tradeideas #nasdaq
chartguy89
29 Aug 15 15:07:50
BGMD -3.56% Stock Charts $BGMD BG Medicine Inc. (NASDAQ) Last Updated: 08/29/2015 17:07:55 BGMD Stock Chart - http://t.co/0xuU46h4uH
Mark Snyir
29 Aug 15 13:36:18
Share any ideas on $BGMD, @FlagshipVenture or @AbbottGlobal and how Galectin 3 should be marketed.
$Stocknewsalerts
29 Aug 15 09:03:27
$BGMD Information for BG Medicine, Inc. From our Stock News Alerts App
Emylers
29 Aug 15 00:46:08
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29 Aug 15 00:44:35
SGYP Synergy Pharmaceuticals, Inc. Current Price http://t.co/jaFyw47JMd $SGYP $BGMD $EWJ $FXY #SGYP #stock #finance
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29 Aug 15 00:42:42
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29 Aug 15 00:42:39
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29 Aug 15 00:38:20
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Somanath
29 Aug 15 00:35:14
Stock_Tracker1 : BGMD BG Medicine INc. Ask Size http://t.co/6iDbFBCbwh $BGMD $DNAX $GLD… http://t.co/NZZaEewMel) http://t.co/jL8rffa9L6
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29 Aug 15 00:34:09
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29 Aug 15 00:34:09
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29 Aug 15 00:34:07
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29 Aug 15 00:32:06
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29 Aug 15 00:22:40
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29 Aug 15 00:11:28
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Michael Cook
28 Aug 15 19:52:50
After 3,000% Gains In The Past Year, We Have A Major New Pick Out! Big Update: http://t.co/QTGaTmzV8y $SLP $BGMD $DEQI
Michael James
28 Aug 15 19:52:04
Subscribers Saw A 525% Gain On $GEQU & A SECRET New Pick Is Out! See The Private Info: http://t.co/RzgF9M02nG $SLP $BGMD $DEQI
Paul Henry
28 Aug 15 19:45:30
We Sent A SECRET New Penny Stock Pick To Our Platinum Members! Get Exclusive Special Access: http://t.co/sJCFystTVz $SLP $BGMD $DEQI
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28 Aug 15 16:12:29
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Bud Fox
28 Aug 15 14:03:46
$BGMD I understand that they are 2 separate issues. But if SP was met, would they remove JUST THAT item from the noncompliance site?
Mark Snyir
28 Aug 15 11:50:05
Excited for the compliance to be announced with $BGMD - need Empery Asset Management and @AbbottGlobal to come through
FINTECHNA
28 Aug 15 09:02:12
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Sentiquant
28 Aug 15 08:59:40
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MoneyTrading
28 Aug 15 08:12:07
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Bud Fox
28 Aug 15 08:08:02
$BGMD How many days they been under $1 now? Couldn't a NASDAQ question be - "yeah, you regained compliance - but you will get another
iStock Market
28 Aug 15 00:53:24
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Stock Rocket
28 Aug 15 00:51:30
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By  +Follow April 3, 2014 10:47AM
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