Please ensure Javascript is enabled for purposes of website accessibility

Why Arcutis Biotherapeutics Stock Is Plunging Today

By Prosper Junior Bakiny – Oct 2, 2020 at 12:40PM

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

The company announced the pricing of a public offering of common stock.

What happened?

Shares of Arcutis Biotherapeutics (ARQT -1.74%) are down by 14.3% as of 12:12 p.m. EDT on Friday, after the company announced the pricing of a public offering of common stock. Investors typically react to stock offerings by selling off shares of the company in question, and it isn't surprising to see Arcutis Biotherapeutics suffer the same fate after resorting to issuing new shares to raise funds. 

So what

Arcutis Biotherapeutics will offer 4 million shares of its common stock for $25 per share. The company is also granting underwriters a 30-day option to acquire an additional 600,000 shares. Arcutis Biotherapeutics expects to collect gross proceeds of $100 million through this transaction, which should close on Oct. 6. The company is also selling 1.4 million shares of its common stock in a concurrent private offering. The drugmaker expects to collect $35 million in gross proceeds through the private offering. Note that the company's shares closed yesterday's trading session at $27.62 apiece. Now, Arcutis Biotherapeutics stock is down to $23.82, as of this writing. 

Man holding his head in panic and a downward bound graph in the background.

Image source: Getty Images.

Now what 

Arcutis Biotherapeutics currently has no products on the market. During its second quarter ended on June. 30, the company reported no revenue and a net loss of $35.4 million. Also, Arcutis Biotherapeutics had $224 million in cash and cash equivalents and marketable securities as of the end of the quarter. The healthcare company does have several products in its pipeline, including ARQ-151, a potential treatment for plaque psoriasis and atopic dermatitis, which is in phase 3 testing and is its most advanced candidate. Arcutis Biotherapeutics will likely use the proceeds from this public offering of common stock to support the development of ARQ-151 as well as other pipeline candidates. 

Prosper Junior Bakiny 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

Arcutis Biotherapeutics, Inc. Stock Quote
Arcutis Biotherapeutics, Inc.
ARQT
$18.63 (-1.74%) $0.33

*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
342%
 
S&P 500 Returns
107%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

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.