SXTP Crashes 21%—What’s Behind the Unraveling of 60 Degrees Pharma?

• 60 Degrees Pharma (SXTP) plummets 21.47% to $1.7002, hitting an intraday low of $1.56
• Announces $5M public offering with up to $5M in warrant exercises, diluting shares
• RSI at neutral 50.42, but Bollinger Bands signal extreme volatility as price breaches 52W low

The stock’s freefall reflects investor skepticism toward the capital raise strategy, with shares collapsing to near-record lows despite the company’s tafenoquine pipeline momentum.

Dilution Fears Overshadow Malaria Drug Pipeline
The 21% plunge stems directly from the announcement of a $5 million public offering with potential warrant exercises. Investors penalized the move due to immediate dilution of existing shareholders, with 2.6 million shares being offered at $1.90—above the current trading price. The contingent $5M from warrants adds uncertainty, as execution depends on future market conditions. Compounding concerns, proceeds are allocated to generic 'working capital' rather than specific R&D programs, raising questions about corporate governance. This contrasts with recent positive data on canine babesiosis studies, highlighting a disconnect between operational progress and capital management.

Technical Bearish Signals and Short-Side Plays
Bollinger Bands: Price is 28% below upper band (2.63), suggesting extreme undervaluation
RSI: 50.42 neutral, but paired with price collapse indicates oversold potential
MACD: Histogram 0.005 shows weakening bearish momentum

The short-term bearish trend favors aggressive short positions or put options. Key support at $1.56 (intraday low) and $1.41 (52W low) must hold to avoid a collapse. If resistance at $1.90 (offer price) fails, downside could extend.
Recommended Play: Watch for a bounce to $1.85 before initiating short positions. Aggressive traders could deploy inverse ETFs like PFE (sector leader down 2.47%) as a proxy bet against biotech dilution.
Options Note: No liquid contracts available in current chain; focus on technical levels and macro dilution sentiment.

Backtest 60 Degrees Stock Performance
The backtest of SXTP's performance after a -21% intraday plunge shows mixed results. While the 3-day win rate is relatively high at 40.78%, the 10-day and 30-day win rates are lower at 37.86% and 41.26%, respectively. This suggests that SXTP tends to recover relatively quickly from such large intraday declines, but the overall short-term performance is still somewhat negative, with returns of -1.45% over 3 days, -0.97% over 10 days, and -0.55% over 30 days. The maximum return during the backtest period was only 0.77%, which occurred on day 57, indicating that while there is a chance of recovery, the upside potential is limited in the short term following a significant intraday downturn.

Dilution Drama or Buying Opportunity? Key Levels to Watch
The 21% collapse marks a critical juncture for SXTP. While the offering addresses immediate liquidity needs, the market’s harsh reaction signals distrust in management’s capital allocation. Investors must monitor whether the stock can stabilize above $1.60 or if it breaches the 52W low of $1.41. With sector leader Pfizer (PFE) also under pressure, broader biotech skepticism adds to headwinds. For now, the path of least resistance remains down—watch for a rebound above $1.90 to invalidate the bearish narrative. Traders: Let the dust settle before chasing bargains.