Immune Pharmaceuticals Inc (NASDAQ:IMNP) Is An Oversell Opportunity

Immune Pharmaceuticals Inc (NASDAQ:IMNP) closed out the session on Wednesday last week for around $1.55 a share.By market open on Thursday, the company went for $0.92 a share. At close on Friday, this had risen to $0.94.That's a close to 40% depreciation to current prices.The driver behind the decline is the company's announcing of a financing that will see it issue $18 million worth of convertible preferred stock and warrants, with the latter having an exercise price of $1.10 per share and an expiry 7 years from the date of issuance.Nobody likes dilution and, in a situation like this, the structure of this financing could have some pretty serious implications farther down the line, as the warrants march towards expiry. IMNP Daily ChartHowever, given the current operational and fundamental situation that Immune is in right now, the dip that we have seen on the back of this issue may be an oversell and, in turn, might be a nice opportunity to pick up shares quite cheap ahead of a longer-term recovery.The thing is, when it comes to equity issue, if the cash raised can be used to fund operations through to a catalyst that can drive some upside momentum, the dilution brought about by the additional shares added to the base can often be negated and, in many cases, outweighed entirely by the reward on offer as and when the catalyst in question hits press.In order to ascertain whether this is the case here, we have got to look at the company's pipeline. Specifically, we've got to look at a lead asset called bertilimumab and its application as a potential treatment for a condition called bullous pemphigoid.Bullous pemphigoid is an autoimmune skin disease that involves the formation of blisters, which are also known as bullae, at the space between the epidermis and dermis skin layers. It causes open wounds and is a serious condition to have not just because it's painful and debilitating but because it also opens up the potential for severe infection if left untreated and exposed.The current standard of care in the space right now is something called prednisone, which is a corticosteroid and has to be used in relatively high doses and with regular frequency in order to be effective.Corticosteroids, however, can have severe side effects and frequent use can cause all sorts of problems not related to the condition being treated as a primary indication. With bertilimumab, Immune is trying to get a treatment on shelves that offers patients an alternative to corticosteroids, or if not an outright alternative, a booster type drug that allows patients to reduce the dose requirements of the corticosteroid therapy over time.Back in September, we got some interim data from this asset and the data was very strong. We covered it here for anybody looking to get caught up on the numbers. This was mid-stage data from a phase 2 study that is ongoing and that is set to pave the way for a larger, and with any luck pivotal, trial, near term.While the company hasn't explicitly outlined that it intends to use the funds raised from the above-discussed equity issue to capitalize the trial, the larger trial that is, this is the most reasonable assumption associated with the action.As such, this suggests that there is a potential near-term event catalyst that could serve to add value and, eventually, could serve to help Immune get this drug on shelves in the US.So what we looking for next?We'd love to see some confirmation that the company plans to initiate a pivotal in BP near-term, with our expectation being that any such initiation will likely come during the first couple of quarters of 2018.Bottom line: this is a company that is about to push into the late stages of a potentially highly rewarding development program and, while the dilution isn't ideal, it far from negates the potential reward on offer if the program matures successfully.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on IMNP, sign up below!Image courtesy of NIAID via FlickrDisclosure: We have no position in IMNP and have not been compensated for this article.