After its share prices slipped following the announcement of a dilutive stock offering earlier this week, Immunomedics (NASDAQ:IMMU) bounced back on Friday, rallying 11.3%.
The company was dealt a disappointing blow earlier this year when the Food and Drug Administration (FDA) issued a complete response letter (CRL) rejecting its application for approval of sacituzumab govitecan, an anti-TROP-2 antibody drug conjugate addressing heavily pretreated metastatic triple-negative breast cancer (mTNBC).
The setback has proven temporary, though. Since the CRL was entirely due to concerns regarding the contract manufacturer that Immunomedics had selected to supply its drug, management simply had to find a new supplier -- Samsung Biologics -- that could pass FDA muster. The company refiled its application for sacituzumab's approval on Dec. 3, sparking a rally in it's share price on hopes Immunomedics has a blockbuster on its hands.
Optimism was dashed slightly on Dec. 4, however, when management disclosed it would raise $250 million via a stock offering, diluting existing shareholders' ownership. Shares tumbled 5.5% on the news.
Worries over the offering was short-lived, though. Share prices bounced back yesterday and again today after Immunomedics announced favorable pricing for the deal that suggested a strong appetite among institutional investors. The company priced 14,285,715 shares of its common stock at $17.50 per share, which was only a small discount to its share price.
There's a big need for mTNBC treatment options for late-line patients. Existing treatment options offer limited efficacy, especially in patients with comorbidity, such as cardiac impairment. In phase 2 trials supporting the FDA application, the overall response rate was 31%, which was significantly better than historical response rates in the indication from existing treatments. If the drug is approved, the company estimates up to 8,000 patients in the U.S. alone could benefit from sacituzumab.
There's no guarantee that the FDA will approve the therapy, but if it does, the additional cash provided by the equity offering will come in handy. So far, Immunomedics has decided to go it alone marketing the drug in the U.S., so it will need to spend heavily in the coming quarters to build up its commercial infrastructure.