What happened

Shares of Arrowhead Pharmaceuticals (NASDAQ:ARWR) fell as much as 11.2% today after the company publicized the pricing of a public stock offering that was announced on Dec. 2. The pharma stock soared by double digits when the news was first announced, likely because the press release teased that the proceeds might be used for "acquisitions" or other strategic investments.

That might still be the case, but the details are having a sobering effect today. Arrowhead Pharmaceuticals announced that it will offer up to 4.6 million shares at $58 apiece, which could raise up to $266.8 million in gross proceeds. The stock touched $72 per share yesterday (Dec. 3), so the pricing represents a sizable discount. Then again, the stock began the year trading at about $10 per share.

As of 10:36 a.m. EST, the stock had settled to an 8.9% loss.

A chart on a chalkboard showing a steady increase and then a sudden decrease.

Image source: Getty Images.

So what

As explained yesterday, Arrowhead Pharmaceuticals is wisely taking advantage of a soaring stock price to pad its balance sheet. Investors have bid up the price of shares in recent months in response to a number of positive developments for the developer of drugs based on the gene-silencing technique called RNA interference (RNAi).

Arrowhead Pharmaceuticals and Johnson & Johnson subsidiary Janssen announced promising results from a triple combination therapy for treating chronic hepatitis B. The phase 1 results were from a limited number of patients followed for a fraction of the time the study is designed for, but they demonstrated that the pair might be close to developing a functional cure for the viral infection.

Shares also rose after fellow RNAi developer Alnylam Pharmaceuticals earned a surprisingly early regulatory approval for Gilvaari, which became the first RNAi drug to use a targeted delivery approach that has received marketing approval. Arrowhead Pharmaceuticals and Dicerna Pharmaceuticals are developing delivery methods based on similar chemistries to Gilvaari.

Lastly, the proposed $9.7 billion acquisition of The Medicines Company by Novartis injected optimism into investors that other promising companies could be the next buyout candidates.

Now what

Arrowhead Pharmaceuticals ended September with more than $258 million in cash and short-term investments. The recent public stock offering will nearly double the company's financial flexibility. That should be comforting to investors, as it de-risks drug development from a pipeline buzzing with activity, but a market cap of $6 billion is certainly generous for the RNAi developer -- barring an acquisition, of course.