Shares of Aptose Biosciences (NASDAQ:APTO) were jumping 14% higher as of 3:14 p.m. EST on Wednesday. The clinical-stage biotech announced on Tuesday that its public stock offering of more than 16 million shares would be priced at $4 per share.
Aptose's decision to raise money through a stock offering makes sense. The stock soared last week after the biotech announced promising preclinical data for experimental drug CG-806 at the American Society of Hematology (ASH) meeting, and Merck (NYSE:MRK) announced that it planned to acquire ArQule (NASDAQ:ARQL). Aptose's lead pipeline candidate uses a similar mechanism of action as ArQule's lead candidate.
Biotech stocks typically sink after the announcement of a public stock offering, though. Why are Aptose shares rising?
Actually, its shares initially fell after the pricing of the offering was reported on Tuesday. However, today's bounce likely resulted from investors who are excited about the company's long-term prospects buying on the pullback.
Merck is buying ArQule for $2.7 billion, primarily to get its Bruton's tyrosine kinase (BTK) inhibitor ARQ 531. Aptose's FLT3/BTK inhibitor CG-806 isn't too far behind ARQ 531 in development. Some investors could be thinking that Aptose's current market cap of a less than $250 million combined with the potential for CG-806 could make the biotech an attractive takeover target if phase 1 clinical studies of the drug go well.
No acquisition is on the table for Aptose yet, though. In the meantime, investors will have to wait for the biotech to achieve more pipeline progress. Aptose anticipates completing its phase 1 study of CG-806 in treating B cell malignancies late next year. It's also evaluating another drug, APTO-523, in an early stage study targeting acute myelogenous leukemia (AML) and myelodysplastic syndrome (MDS), which is expected to wrap up by mid-2020.