After the company released the pricing details of its just-announced common stock offering, shares of Vascular Biogenics (NASDAQ:VBLT), a clinical-stage biotech focused on cancer, fell 18% as of 11:40 a.m. EST on Friday.
Vascular Biogenics announced that it is raising $18.75 million from the sale of 2.5 million shares of common stock. That works out to a price of $7.50 per share. The offering is expected to dilute current shareholders by about 9%.
That $7.50 share price isn't sitting well with traders because the stock ended yesterday's trading session at $9. That hints that management had to offer a deep discount on its share price in order to attract enough demand.
The company stated that the fresh capital will be used to advance its clinical pipeline and for general corporate purposes.
Given the update, it isn't hard to figure out why shares are being thrashed today.
2017 has been a great year for Vascular Biogenics' shareholders, even after accounting for today's drop. Shares are up more than 50% since January thanks to a series of positive announcements, including:
- A $2.5 million award from the Israel Innovation Authority.
- The presentation of data from three phase 2 studies evaluating VB-111 -- the company's lead compound -- as a treatment for glioblastoma (brain cancer), ovarian cancer, and thyroid cancer. In all three studies, patients who used VB-111 had better survival outcomes than those in the comparison group.
- VB-111 was granted orphan medicinal product status as a hopeful treatment for ovarian cancer in Europe.
- An independent Data Safety Monitoring Committee unanimously recommended that the company's phase 3 GLOBE study should continue as planned. Data is expected to be released in the first quarter of 2018.
- Signed an exclusive deal with NonoCarrier for the development, commercialization, and supply of VB-111 in Japan. The deal landed Vascular Biogenics a $15 million up-front payment and the potential to earn more than $100 million in milestone payments plus royalties.
Given the slew of positive updates, it is understandable why shareholders are having such a profitable year.
Moving forward, Vascular Biogenics looks to be in good financial shape after this capital raise. Management had previously estimated that it had enough capital on hand to fund operations through 2019. Adding another $18 million or so to the mix should only extend that runway further.
For investors, the next big catalyst to look forward to will be the data release from the phase 3 GLOBE study in early 2018. If that data looks good, then shareholders could be well positioned to have a profitable 2018, too.