Shares of Coherus Biosciences (CHRS 9.88%), a clinical-stage biotech focused on biosimilar drug development, dropped by more than 11% as of 11:25 a.m. EST on Wednesday.
The sell-off was triggered by the release of pricing details related to its just announced secondary common stock offering.
Coherus stated that it is selling 5.1 million shares of stock at a price of $24.25 per share. The underwriters of the deal have also been granted a 30-day option to purchase up to an additional 773,196 shares. In total, this deal could raise up to $140 million before subtracting fees.
The markets appear to be reacting harshly to the pricing details of this offering. That makes sense when considering that Coherus' stock ended Tuesday's trading session at $26.65. Thus, the deal's price of $24.25 suggests that Coherus had to offer a discount in order to attract enough buyers.
Traders are knocking down the company's share price in response to the news.
Coherus said that the proceeds of the deal will be used to build the company's sales and marketing infrastructure for the hopeful launch of CHS-1701. This product candidate is a biosimilar version of Amgen's (AMGN 1.77%) Neulasta and it is currently in regulators hands in both the U.S. and E.U. A go/no go decision in the U.S. is expected by June 9, 2017, so building the commercial infrastructure now makes sense to me.
Management also stated that a portion of the proceeds will be used to fund the clinical developments of its two other product candidates. This includes CHS-0214, a biosimilar version of Amgen's Enbrel, and CHS-1420, a biosimilar version of AbbVie's Humira. Coherus believes that both of these drugs will be in regulators' hands before the end of the year if everything goes according to plan.
All in all, 2017 promises to be an exciting year for Coherus' shareholders. With a reloaded cash pile and billions of dollars in sales up for grabs, this remains a stock for Amgen and AbbVie investors to monitor closely.