Shares of clinical-stage biopharma Bellicum Pharmaceuticals (BLCM -4.58%) dropped over 14% today after the company announced a proposed public offering of common stock. The fundraising move would see an additional 7 million shares hit the market, although that could rise to slightly over 8 million shares if the additional allotments find buyers.
There are about 33.5 million shares outstanding right now, so the offering will dilute existing shareholders by 21% to 24%. By that benchmark, the fact that Bellicum Pharmaceuticals shares are down only 9.5% by 1:34 p.m. EDT could be viewed as a small silver lining.
The announcement was generally expected. Shares exploded higher last week after the company announced that the U.S. Food and Drug Administration lifted a clinical hold on its lead product candidate named BPX-1501, which is being developed as a potential treatment for graft-versus-host disease for certain indications.
That's good news all things considered, but the small biopharma ended 2017 with just $106 million in cash, cash equivalents, restricted cash, and investment securities. It desperately needed to pad its balance sheet to continue product candidate development -- or even just to keep the lights on beyond 2018. Bellicum Pharmaceuticals burned through $87 million in cash last year from operations alone.
Today's share offering was expected and relatively well-timed after last week's move higher. Then again, stock moves for this biopharma are all relative. Bellicum Pharmaceuticals shares have slid for the past five years, although brief spikes have pierced the otherwise consistent downward trend. It has an intriguing pipeline and technology platform on the surface, but hasn't courted any big name partners to help offset expenses. That could continue to hold the company back.