Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Revance Therapeutics Stock Is Falling Today

By Cory Renauer – Dec 4, 2019 at 12:24PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The pricing of a secondary offering is to blame.

What happened

Shares of Revance Therapeutics (RVNC 0.92%) are under pressure after management announced the pricing of a secondary offering. Investors dismayed by the pricing of the offering have hammered the biotech stock 16.4% lower as of 12:07 p.m. EST on Wednesday.

So what

Revance shares had been climbing since the company submitted an application to the FDA for DAXI late last month. On Monday, shares of Revance peaked above $20 per share and stayed there through the end of Tuesday's session, which is why investors were surprised at the $17 per share offering price announced today.

Person looking at a downward-sloping chart arrow crashing through the floor.

Image source: Getty Images.

DAXI is a longer-lasting version of the world's favorite neurotoxin, Botox, and Revance has evidence to prove it works better. That means Revance could end up competing with AbbVie (ABBV -0.16%) for a slice of Botox sales, which have risen to around $2.7 billion annually.

Now what

Within a couple of months, we'll know if the FDA will begin a review of DAXI that will probably last 10 months. Revance's collaboration partner, Mylan (MYL), passed on the chance to fund late-stage development of DAXI in August and has until April 30, 2020, to change its mind.

If Mylan agrees to launch DAXI and give Revance a mid-double-digit royalty percentage on future sales, it could get much harder for AbbVie's acquisition of Allergan to deliver a positive return.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool recommends Mylan. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.