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Why Arcutis Biotherapeutics Stock Is Plunging Today

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

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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.

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Stocks Mentioned

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

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