Shares of Forty Seven (NASDAQ:FTSV) rose more than 18% today after the company announced the pricing of a public stock offering. The biopharma will issue up to 5.59 million shares of common stock at $35 apiece. The offering will raise up to $195.6 million in gross proceeds.
Why would a stock gain on news of dilution? Well, shares of Forty Seven were trading at under $6 apiece at the end of October, but rose heading into the annual meeting of the American Society of Hematology. The company presented promising data at the academic meeting that caused shares to nearly double in a single day.
As of 2:42 p.m. EST, the pharma stock had settled to a 11.6% gain.
Forty Seven's lead drug candidate is the monoclonal antibody magrolimab, which is being developed as a treatment for two rare blood disorders: myelodysplastic syndrome (MDS) and acute myeloid leukemia (AML).
In the latest clinical trial, nearly 92% of untreated higher-risk MDS patients responded to treatment, while 50% achieved a complete response, meaning they had no evidence of disease. The drug also performed well in an underserved population of patients: those who are ineligible for chemotherapy. Magrolimab triggered anti-tumor responses and complete responses in 64% and 55%, respectively, of individuals with advanced disease.
It's estimated that currently available treatments are unhelpful for nearly 75% of MDS and AML patients, which makes the promising results all the more impressive.
As I mentioned a few days ago, biotech investors should always be on the lookout for public stock offerings following promising data updates. It makes sense, too, that management would want to take full advantage of a soaring stock price to pad the balance sheet. That's exactly what happened here. Forty Seven ended September with about $167 million in cash, so the public stock offering will more than double the cushion on the balance sheet. The cash will be needed to advance magrolimab through the clinic and onto the market, which the company hopes can happen as soon as 2022.