Please ensure Javascript is enabled for purposes of website accessibility

Why Aptose Biosciences Stock Sank Today

By Keith Speights – Jul 16, 2020 at 3:31PM

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

Dilution is on the way.

What happened

Shares of Aptose Biosciences (APTO 2.22%) were sinking 13.7% lower as of 3:22 p.m. EDT on Thursday. The decline came after the company announced the pricing of a stock offering Wednesday evening.

So what

Secondary stock offerings typically cause share prices to fall. That makes sense. The addition of new shares dilutes the value of existing shares.

Scientist looking through microscope.

Image source: Getty Images.

Aptose plans to sell 10.5 million new shares at a price of $5.25 per share. The volume of shares being offered represents nearly 14% of the company's total outstanding shares. The price of the offering reflects a 16% discount from the Wednesday closing price of the biotech stock

The good news for Aptose with its stock offering, though, is that it will raise gross proceeds of around $55 million. Even after paying commissions and netting out underwriting discounts and offering expenses, the company will still have plenty of additional cash to fund clinical trials and use for other purposes.

Now what

Aptose's stock offering should close around July 20. The company is currently evaluating two pipeline candidates in phase 1 clinical studies -- CG-806 and APT-253. Aptose expects to expand its study of CG-806 as a potential treatment for B-cell malignancies to include acute myeloid leukemia in the second half of 2020.

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.

Premium Investing Services

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