Shares in Artelo Biosciences (ARTL) crashed more than 23% early Monday after the American biopharma company on Friday announced plans to raise up to $31.4 million through shares and warrant sales. The move likely sparked dilution fears and followed a 230.41% surge in the shares on Friday, two days after Artelo signaled its push into the lucrative obesity market.
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Artelo Raises $11M in Capital
The California-based company on Friday said it agreed to sell about 3.18 million of its shares to raise gross proceeds of about $11 million. It also plans to sell warrants giving investors the right to purchase up to 6.37 million of its shares — which if exercised in full on a cash basis, could bring in about $20.4 million.
Artelo said the private placement for both offerings, which carry a combined purchase price of $3.45 per share and are being sold at-the-market under Nasdaq rules, is expected to close on Monday.
The company noted that it intends to use the net proceeds from the offering for working capital, bridge loan repayment, and general corporate purposes. “No assurance can be given that any of the warrants will be exercised, or that the Company will receive cash proceeds from the exercise of the warrants,” Artelo noted in a statement.
Artelo Eyes “Commercial Relevance” in Obesity Market
Meanwhile, Artelo on Wednesday announced that it was exploring expanded use of its experimental drug, ART27.13, as a “potential companion therapy” in GLP-1 treatments. ART27.13 is being developed to target the body’s endocannabinoid system, or the part affected by cannabis, to help treat anorexia — a disease that causes appetite and weight loss — and cachexia associated with cancer.
On the other hand, GLP-1, or glucagon-like peptide-1, is a hormone that manages blood sugar and appetite and plays a key role in medications used to manage obesity and type 2 diabetes. Drugs targeting these receptors are a key part of the lucrative obesity market, which is dominated by U.S.-based Eli Lilly (LLY) and Danish rival Novo Nordisk (NVO).
Artelo said its earlier studies in cancer patients using GLP-1 drugs suggested that ART27.13 might help protect muscles in such patients. As a result, the company has filed a provisional patent on this application.
“With new non-clinical research commencing and the recent filing of a patent application covering the use of CB2 agonists with GLP-1 drugs, we are aiming to build a scientific and strategic foundation with ART27.13 in an area of potentially significant commercial relevance,” noted Andrew Yates, Artelo’s chief scientific officer.
Is ARTL a Good Stock to Buy?
TipRanks’ AI analysts largely hold an Underperform rating on Artelo Biosciences’ shares. For instance, the OpenAI-5.2-based analyst calls ARTL a Sell based on a score of 41 out of 100, citing the company’s weak financial performance.
