Israeli company ReWalk Robotics Ltd. (Nasdaq: RWLK), which last week obtained FDA marketing approval in the US for its new product for rehabilitation for stroke victims, has announced the pricing for a $5 million private placement. The company's share price plunged 18% following the announcement.
ReWalk's share soared 123% following the announcement of marketing approval last week. Following the announcement of the private placement pricing, the share price lost half of those gains, but is still 68% higher than before marketing approval for the new product was announced.
ReWalk conducted its private placement at $6 per share, 12% below the closing price at the end of Friday's trading, before the financing round. Every share in the private placement was accompanied by an option at a $6 strike price, making the options in the money when the deal was announced. The current share price is $5.60, 7% lower than the price in the private placement, meaning that options granted are now out of the money. ReWalk's market cap is $25 million.
ReWalk will use the money raised to market its newly approved product. The objective of ReWalk's first product was to serve as an accessory for daily use instead of a wheelchair, not merely as a training device. The new product ReStore Exo-Suit is designed for use in a rehabilitation center, not in the home. Its use does not require a strong and properly functioning upper body. The new product is priced substantially lower than the first product, but it also competes with existing products.
Following approval of his company's new product, ReWalk CEO Larry Jasinski said, "Given the high frequency of stroke and the need for more effective and economical clinical solutions, the market for ReStore is substantial. The reasonable price of the device and the multiple uses that it offers make it an attractive solution for wider variety of rehabilitation uses than previous technologies."
Sales of ReWalk's first product were disappointing. The company had only $1.1 million in revenue in the first quarter of 2019, and posted a $4 million loss. It now has another opportunity. Even after the private placement, however, the amount of cash it has is low in comparison with the business plan that it will have to execute in order to market its product in the US. The company will therefore either have to devise a very focused and creative marketing plan, or raise more money.
Published by Globes, Israel business news - en.globes.co.il - on June 11, 2019
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