Wall Street had a good session on Monday, celebrating a more optimistic view on trade and general economic prospects. Major merger and acquisition activity was also a highlight of the day. Yet some stocks ended up getting left out of the party and saw their shares sink precipitously. Aurora Cannabis (ACB 4.26%), Kirkland Lake Gold (KL), and CymaBay Therapeutics (CBAY -0.47%) were among the worst performers. Here's why they did so poorly.
Debt deal sends Aurora lower
Shares of Aurora Cannabis dropped 7% after the marijuana company announced the pricing for conversion rights on convertible debentures that investors own. Holders of about 227 million Canadian dollars' worth of debt elected to use the conversion privilege under the debentures' terms. That'll result in roughly 69 million new shares getting issued at an effective price of CA$3.28 per share, which is below where the stock traded at the end of last week. Dilution has been a problem for Aurora, and with marijuana stocks in general having a lot of trouble, it's not obvious when Aurora's shares could start to move higher again.
Kirkland pays up for Detour
Kirkland Lake Gold saw its stock fall 17% following the gold miner's announcement that it would purchase industry peer Detour Gold. The all-stock transaction will pay Detour Gold shareholders 0.4343 Kirkland shares for their Detour stock, which works out to CA$27.50 per share based on Friday's closing prices. Kirkland is happy about the prospect of adding the Detour Lake mine to its own portfolio of promising mining assets. However, Kirkland investors seem to think that the company paid too much for Detour. Shareholders will still have to approve the deal, but the very small move higher in Detour stock suggests that investors aren't all that optimistic about the combination.
CymaBay falls apart
Finally, shares of CymaBay Therapeutics plunged 76%. The biopharmaceutical company decided that it would halt its clinical development of its seladelpar liver treatment, based on troubling biopsy findings that suggested that the drug might have had unintended adverse effects on liver tissue. Investors had had high hopes for seladelpar, and the treatment was by far the most advanced drug in CymaBay's pipeline. Now, shareholders will have to wait to see how CymaBay decides to move forward, and hopes for a relatively quick approval process for seladelpar now look like they've gone up in smoke.