What happened

Shares of Matinas Biopharma (NYSEMKT:MTNB) fell over 23% today after the company announced the pricing of a public stock offering. The clinical-stage pharmaceutical specialist will offer up to 37.1 million shares at $1.55 apiece. The offering could raise gross proceeds of up to $57.5 million. 

Today's news continues a rough start to the year for Matinas Biopharma. Shares reached their highest level in years on the first trading day of 2020, but are already down 34% year to date.

As of 2:21 p.m. EST, the pharma stock had settled to a 22% loss.

A declining chart drawn on a chalkboard.

Image source: Getty Images.

So what

The primary reason investors know about Matinas Biopharma is MAT9001, which is also the primary reason for the public stock offering. The drug candidate is an omega-3 fatty acid-based therapy being developed to reduce triglycerides, cholesterols, and apolipoproteins. While Matinas Biopharma claims that MAT9001 is superior to Vascepa, which is made by Amarin, investors would ideally like to see more robust data supporting the claim. The company can now comfortably fund small-scale studies for the drug candidate.

Now what

Matinas Biopharma ended September with $32.7 million in cash, so realizing the maximum proceeds from the recent stock offering would certainly bolster its financial position. The company is conducting head-to-head studies evaluating MAT9001 and Vascepa, which could be brilliant if the lesser-known drug candidate shines. Then again, Vascepa was studied in thousands of individuals, and Matinas Biopharma simply doesn't have the financial resources to match that level of enrollment, meaning the results are likely to be interpreted as less robust either way. This small-cap stock remains a very risky investment.