Shares of Kodiak Sciences (NASDAQ:KOD) were jumping 17.3% higher as of 11:16 a.m. EST on Wednesday following the drugmaker's announcement after the market closed Tuesday of the specific pricing of a public stock offering. Kodiak plans to sell 6 million shares at a price of $46 per share -- well below its closing price on Tuesday.
Most biotech stocks fall when public stock offerings are announced at a lower share price. However, investors remain enthusiastic about an announcement Kodiak made on Monday about a royalty deal with Baker Bros. Advisors (BBA) for experimental eye-disease drug KSI-301.
Kodiak's pricing for its public stock offering reflected the strong position the company is in. The sale of 6 million new shares represents more than 16% of outstanding shares. However, Kodiak's offering price of $46 per share was only 6.5% lower than its Tuesday closing price.
Investors are clearly optimistic that buying the stock at $46 per share will lead to significant returns. With the level of interest in KSI-301, as evidenced by the BBA royalty deal, that optimism could be well founded.
The public stock offering is imminent: Kodiak expects to close the transaction by Dec. 6, 2019. The company should also receive $100 million up front from BBA by early January 2020, with another $125 million payable upon the achievement of specific milestones.