Two weeks in the life of a Titan Medical shareholder: It’s been quite the ride

For all equity investors recent years weeks happen to be a brutal experience: everybody is poorer compared to what they were at the beginning of the entire year.

Investors in Titan Medical Inc., a company that’s focused “on the look and development of a robotic surgical system for application in minimally invasive surgery,” have observed exactly the same pattern.

But with an added dimension: unbelievable volatility.

The shares are actually trading about half the level these were trading at in the center of last week using the main news being an overnight marketed offering of units (a $10.5-million deal that closed Friday); and also the company telling the world on Feb. 3 that, at the request of IIROC Market Surveillance, it “is not aware of any material undisclosed development at this time that would cause the recent movement within the Company’s stock price.”

And some shareholders are angry. “As existing shareholders we’ve suffered the pain sensation of the company raising $10 million,” said one noting that Titan also raised two plenty of equity last November, US$4 million via a private placement and $11.5 million via a public offering.

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Here is the time line which has caused those shareholders to be upset:

Two weeks back (Jan. 29) the shares traded at $1.30 C a 20 per cent gain for that week;In early part of the following week, the stock closed higher and reached $1.50 on Feb. 2 after hitting $1.83 with an intraday basis. Daily volume was twice the typical;On Feb. 3, following the markets closed, Titan C which closed at $1.45 a share – announced an overnight-marketed offering. It might sell units (shares and warrants) using the terms to be set in the context of the market.On Feb. 4 the shares came by almost 35 percent to $0.95 and fell by a further $0.15 the following day. Volume was more than 10 times the normal.One possible reason behind the large increase in trading is the fact that unit offerings allow investors to buy units and short the stock knowing they can cover the short sale by taking exercise the warrant.Another possible explanation was that contrary to the norm, the offering agent hadn’t attracted enough investors to close the offering before markets opened. At lunchtime on Feb. 4 Titan provided an “update” and said the agent (Bloom Burton) “is continuing to market the offering,” with further updates provided when available.

Stephen Randall, Titan’s chief financial officer, said, “we were unable to shut it the very first thing in the morning as anticipated,” adding “some from the commitments didn’t complete. We never might have gone in it if we didn’t think we had a full book.”

On Feb. 5 Titan said hello would sell up to 8.9 million units – with each unit consisting of a share along with a warrant C at $0.90 per unit. The price of the units represented a substantial discount to the shares’ closing price the day the offer was announced.On Friday, Titan closed it’s offering: it raised more capital than originally planned but for the very first time in at least per week the stock closed higher.

“It would be a success, because we raised money. We are an improvement stage company and do things: raise money and spend it,” said Randall noting Titan’s recent experience continues “a pattern we have seen whenever we perform a raise. We think we get hit by short sellers.”

Financial Post

bcritchley@nationalpost.com