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Here's Why Avrobio Fell as Much as 16.4% Today

By Maxx Chatsko - Feb 13, 2020 at 2:06PM

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The small-cap biopharmaceutical company announced a public stock offering.

What happened

Shares of Avrobio (AVRO -2.69%) fell as much as 16.4% today after the company announced and priced a public offering of common stock. The small-cap biopharmaceutical company will raise up to $115 million in gross proceeds by selling up to 5 million shares at $23 apiece. 

The move wisely takes advantage of a soaring stock price, which was approaching a one-year high. The new funds will pad a balance sheet that sported $206 million in cash at the end of September and support ongoing development of the company's gene therapy drug candidates.

As of 1:13 p.m. EST, the pharma stock had settled to a 15.2% loss.

Multiple arrows with a declining slope drawn on a chalkboard.

Image source: Getty Images.

So what

Avrobio has three gene therapy drug candidates in early-stage development. Given Avrobio's market valuation of only $713 million, investors appear to be waiting for the company to demonstrate real-world success before they get too carried away. 

That's not too surprising considering the early-stage nature of the drug pipeline, but Avrobio thinks it will eventually turn heads on Wall Street thanks to its technology platform. The company has designed a novel lentiviral vector (LV2) -- a vector is the vehicle used to deliver the therapeutic payload into a patient's cells -- using its plato platform that is expected to boast several advantages over prior-generation vectors. 

For example, LV2 is expected to have greater efficacy at making genetic changes, allow for individualized conditioning and dosing regimens, have improved shelf life, and benefit from improved manufacturing processes. The first patient was dosed with a plato vector in late December. All new patients receiving treatment in two of the company's three ongoing clinical programs will receive plato vectors going forward.

Now what

Avrobio should now have plenty of cash to support the continued development of its three experimental gene therapies throughout 2020. If early results from individuals dosed with drug candidates designed using the plato platform show promise, then Wall Street might take notice of the small-cap biopharmaceutical company. Until then, investors seem content to wait and see how things play out.

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