Please ensure Javascript is enabled for purposes of website accessibility

Why Theravance Biopharma Shares Are Sinking Today

By Keith Speights - Feb 12, 2020 at 10:44AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors didn't like the drugmaker's pricing of a planned public stock offering.

What happened

Shares of Theravance Biopharma (TBPH 1.59%) were sinking 10.7% lower as of 11:04 a.m. EST on Wednesday. This decline came after the drugmaker announced the pricing of a public stock offering after the market closed on Tuesday. Theravance plans to sell 5.5 million new shares at a price of $27 per share.

So what

Public stock offerings come with the territory when investing in biotech stocks. The downside to these transactions is that they dilute the value of existing shares. That's the main reason why Theravance's share price fell today.

Man with hands on his head and a stock chart in the background

Image source: Getty Images.

Investors also appeared to have been disappointed by the pricing of the offering. Issuing another 5.5 million shares for public sale represents around 9.7% of Theravance's outstanding shares. The offer price, though, was nearly 12% lower than the drugmaker's share price before it first announced Monday evening that it planned to conduct a public stock offering.

However, there was some good news for Theravance as well. The stock offering is expected to raise around $148.5 million in gross proceeds. The company plans to use the money to fund operations and advance its pipeline. Theravance reported $319.7 million in cash, cash equivalents, and short-term investments as of Sept. 30, 2019. It's losing more than $50 million each quarter on average.

Now what

Theravance has several important milestones on the way. It expects to report results later this year from clinical studies of TD-5202 in treating inflammatory intestinal diseases and TD-8236 in treating asthma. An approval decision from the FDA for Trelegy Ellipta in treating asthma is also expected in 2020. The drug is already approved for treating chronic obstructive pulmonary disease (COPD). Theravance receives royalties from GlaxoSmithKline of between 5.5% and 8.5% of the drug's total net sales.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Theravance Biopharma, Inc. Stock Quote
Theravance Biopharma, Inc.
$9.61 (1.59%) $0.15
GSK Stock Quote
$36.03 (0.84%) $0.30

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.