Shares of NewLink Genetics Corp. (NASDAQ:NLNK), a clinical stage biotech with an oncology focus, are rising in response to a secondary offering that ended up priced much better than anticipated. Instead of hammering the stock as expected, yesterday's pricing announcement has lifted the stock 13.7% higher as of 11:58 a.m. EDT.
Last month, NewLink released data that suggests its lead candidate, indoximod, has a shot at earning approval to treat advanced melanoma patients in combination with Keytruda or Opdivo. The news sent the stock screaming higher and prompted the company to initiate a secondary offering to bolster its cash reserves.
Issuing new shares tends to lower stock prices because they reduce each shareholder's slice of any potential profits. It looks like NewLink is bucking the trend and actually rising today because it priced the 5 million shares it intends to offer the public at $10.25 per share, which is a bit more than expected.
NewLink finished June with about 29.3 million shares outstanding and $107.8 million in cash and cash equivalents on its balance sheet. If the offering is successful, NewLink's share count will rise about 19.6%, padding its balance sheet with roughly another $50 million.
The company burned through $37.6 million this year, and combination studies with indoximod and Keytruda aren't expected to complete enrollment until the end of 2018. While today's offering will extend the company's cash runway, it might not be long enough to achieve liftoff.