SeaStar Medical (NASDAQ: ICU) stock is up 100% and more yesterday. ICU stock rose on - at least - some good news from the FDA concerning a treatment under development. We would very strongly suggest that the next stage here is a stock issue. In fact, we suggest that it’s near inevitable.
The financial background here is that SeaStar is running on fumes. The last accounts show $13k (yes, thirteen thousand) in cash and $5 million of accounts payable and accrued expenses. There are impolite terms for that sort of situation and the polite one might be not obviously wholly solvent.
We’ve looked earlier in the year at SeaStar Medical: “This works just great as long as the valuation points come up trumps. For Seastar: “SeaStar Medical Holding Shares Drop After US FDA Rejects Application” Ah. It didn't pass that latest valuation point. Other things were going well, a distribution agreement for example.
“You can see how this could work. We know we need to raise more cash but we've this FDA decision coming up. When we pass that then the stock issue will be less dilutive. So, let's wait. Until, of course, the FDA didn't approve. Seastar basically needs more money, more capital. How it's going to get it at this stock price is a difficult problem to solve. Indeed, without being hugely dilutive, it's not obvious that it is solvable. “
The situation has now changed of course.
SeaStar Medical stock price from Google Finance
For now there is something that has passed that FDA muster: “SeaStar Medical Holdings, a medtech company developing solutions to reduce the consequences of hyperinflammation on vital organs, recently announced it had obtained FDA Breakthrough Device Designation for its patented Selective Cytopheretic Device (SCD) for use in hepatorenal syndrome patients in the ICU. The hepatorenal syndrome designation becomes the company’s third for the SCD device, along with adult acute kidney injury (AKI) and cardiorenal syndrome.” More on that here.
This doesn’t mean they’re about to start selling anything. But as we can see from the stock price movement it’s definitely a valuation point. This also means - to us at least it does - that there will be a stock issue imminent. They’ve recently filed a shelf registration. They need development cash. They’ve had a valuation point, the stock has at least doubled. A stock issue would be half as dilutive as it was yesterday morning. So, yes, we expect a SeaStar Medical stock issue in 3...2…1.
We don't think we’re being unduly mystic with that prediction.
