What happened?

Shares of Provention Bio (NASDAQ:PRVB), a clinical-stage biotech company, fell by about 7% on Wednesday, following the company's announcement that it would initiate a public offering of common stock. Provention Bio made this announcement on Tuesday afternoon. Naturally, investors aren't too happy about the prospect of the drugmaker diluting its existing shareholders. 

So what

Provention Bio intends to sell 5.5 million shares of its common stock, and the company will give underwriters a 30-day option to buy an additional 825,000 shares. Provention Bio will use the proceeds from this public offering of common stock for "general corporate purposes, including the continued funding of the clinical development, regulatory and manufacturing activities." As of this writing, the drugmaker has yet to announce the pricing of this transaction, but investors can probably expect the company to do so relatively soon. 

Man with a panicked look on his face and his hands on his forehead, with a downward-pointing graph in the background.

Image source: Getty Images.

Now what

Provention Bio focuses on developing drugs for the prevention of certain diseases and conditions. On Monday, the company announced positive results from a clinical trial for teplizumab, a drug that is being investigated for the prevention of diabetes in at-risk patients. During the trial, a 14-day course of teplizumab "significantly delayed the onset of insulin-dependent type 1 diabetes" in at-risk patients by a median of three years.

Note that Provention Bio had previously reported that teplizumab was able to delay the onset of diabetes by a median of two years. The biotech company initiated a rolling submission for its Biologics License Application (BLA) to the U.S. Food and Drug Administration (FDA) back in April. Provention Bio expects to complete the submission of its BLA by the end of the year. The proceeds from this recently announced public offering of common stock will help fund the company's pre-commercial activities for teplizumab.