Bethesda-Based Biotech Returning to Wall Street with New Offering
Spherix says raising funds is key to its future.
By Bob Keefe | September 8, 2010
A longtime Bethesda, Md. biotech firm is turning back to Wall Street with hopes of raising funds it says is key to the future of its trademark product - and potentially the future of the entire company.
Spherix Inc., a small biotech firm incorporated in 1967, said it hopes to raise as much as $10 million through an offering of convertible preferred stock.
If it doesn't raise additional funds, it might not be able to continue operating, the company acknowledged in a Securities and Exchange Commission filing. Spherix said it had cash and short-term investments of about $4.7 million on hand at the end of June and was expected to use that up within the next six months.
News of the planned stock offering slammed Spherix's current shares, driving them down more than 25 percent by midday Tuesday. Shares were about $1.30 by midday Tuesday.
Though old compared to most biotech companies, Spherix has struggled in recent years.
Two years ago, it faced delisting from the NASDAQ trading system because it failed to maintain the minimum price requirement of $1 per share for 30 consecutive days.
In the first half of this year, it has lost about $4.7 million, according its SEC filing. That was on top of nearly $9.2 million in losses in 2009.
In its SEC filing, Spherix said it needed to raise money to continue development and introduction of a new low-calorie, sweetener-based drug it calls D-tagatose. The drug was originally intended to treat diabetes, but also could be marketed for other purposes, according to the company.
Earlier this year, Spherix announced it was seeking a pharmaceutical industry partner to continue development of the diabetes drug because of the time and expenses required for U.S. Food and Drug Administration approval.
At the same time, the company said it would continue to pursue developing D-tagatose for the treatment of high triglycerides, which can cause heart failure and stroke.
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