SXTP Plummets 20% Amid Capital Raise Uncertainty—What’s Next for 60 Degrees?

• 60 Degrees (SXTP) plunges 20% to $1.73, hitting a day low of $1.56
• Announces $5M public offering with up to $5M via warrant exercises, raising dilution concerns
• Tafenoquine’s $245M babesiosis market potential sparks mixed investor reactions
• 52-week range: $1.41 to $14.58 highlights extreme volatility

The stock’s dramatic drop follows a day of conflicting catalysts: a capital raise to fund operations collides with bullish projections for its anti-babesiosis drug pipeline. Investors are pricing in execution risks as the company navigates regulatory hurdles and warrant uncertainties.

Dilution Fears Overshadow Babesiosis Optimism
The 20% selloff traces directly to the pricing of a $5M equity offering with potential $5M in warrant exercises. Investors appear concerned about immediate dilution from 2.6M new shares, exacerbating existing worries about the company’s cash runway. While the offering’s proceeds aim to bolster working capital, the contingent warrant structure—18-month exercisable at $1.90—adds uncertainty. Meanwhile, the $245M babesiosis TAM announcement, while theoretically positive, faces skepticism due to the three ongoing trials’ unproven outcomes and 2026 FDA timeline. The market is prioritizing near-term financial risks over long-shot drug commercialization hopes.

Biotech Sector Mixed Amid Regulatory Headwinds
While sector leader GILD (Gilead Sciences) slips 2.1%, broader biotech sentiment remains cautious. 60 Degrees’ decline contrasts with industry trends driven by gene therapy advancements and FDA approvals, underscoring its idiosyncratic risks. The company’s lack of manufacturing capacity and reliance on third-party clinical execution—highlighted in its forward-looking statements—differentiates it from peers navigating similar regulatory environments.

Technical Bearish Signals and Warrant Watch
Risk Metrics:
• MACD: -0.0148 (histogram 0.0052 above signal line)
• RSI: 50.42 (neutral)
• Bollinger Bands: Below middle band (2.32) with lower band at 2.00
• 30-day support: $2.16–$2.18 (psychological key)

The technicals show short-term bearish momentum with price below critical moving averages. Traders should monitor the $1.56–$1.60 zone for potential rebounds. While no options contracts are listed, investors could focus on the Series A-2 warrants expiring in 18 months—priced at $1.90—which now trade deeply out-of-the-money. A rebound above $2.00 would reignite interest in these instruments.

Action Alert: Short-term traders might consider a put spread around $1.60–$1.70 strikes if support holds. The lack of options liquidity emphasizes the speculative nature of this play.

Backtest 60 Degrees Stock Performance
The backtest of SXTP's performance after a -20% intraday plunge shows mixed results. While the 3-day win rate is high at 41.99%, the 10-day and 30-day win rates are slightly lower at 38.08% and 38.79%, respectively. This indicates that although SXTP tends to recover in the short term, long-term returns are more modest. The maximum return during the backtest period was 0.83%, which occurred on day 57, suggesting that while there is a chance of recovery, the overall performance after such a significant drop is generally muted.

Dilution Risks Cloud Long-Term Drug Potential—Watch Warrant Mechanics
SXTP’s sharp decline reflects investor skepticism toward its capital structure and execution timeline. While the $245M babesiosis opportunity offers a distant catalyst, near-term focus remains on warrant exercises and clinical trial results. GILD’s sector leadership weakness (-2.1%) suggests broader caution in biotech. Investors should prioritize warrant mechanics and cash burn rates over market cap aspirations. Action Insight: Track the $2.00 resistance and Series A-2 warrant terms—failure to close above $2.00 could trigger deeper declines.