What happened Shares of KemPharm (NASDAQ: KMPH) were sinking 12.6% as of 3:33 p.m. EDT on Friday. The big drop came after the drugmaker announced the exercise of existing warrants and the issuance of new warrants. So what A warrant gives the right to buy a stock at a set price and set date. In KemPharm's latest transaction, holders with warrants that could have been exercised for nearly 6.2 million shares received a new deal. They received cash in exchange for a commitment from the company to issue new warrants. These new warrants will allow the purchase of up to 1,529,379 KemPharm shares. They will give the holders the right to buy the stock at $16.50 per share. The warrants expire on Dec. 31, 2026. Image source: Getty Images. Investors didn't react favorably because the transaction means more dilution is on the way. However, the deal will generate close to $39.1 million in gross proceeds for KemPharm. Now what KemPharm expects to launch Azstarys in treating attention deficit hyperactivity disorder (ADHD) within the next few months. The drug won Food and Drug Administration approval in March. Its stock is scheduled to be added to the Russell 2000 and Russell 3000 indexes effective June 28. These milestones could serve as positive catalysts for the biotech stock. 10 stocks we like better than KemPharmWhen our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and KemPharm wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of June 7, 2021 Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source