Shares of Aptinyx (NASDAQ:APTX) were sinking 7.2% lower as of 3:32 p.m. EDT on Wednesday after falling as much as 12.8% earlier in the day. The decline stemmed from the company's announcement on Tuesday evening that it plans to sell 12 million shares in a public stock offering.
Biotech stocks typically drop on news of a secondary stock offering. The issuance of new shares dilutes the value of existing shares.
In Aptinyx's case, the sale of 12 million shares represents roughly 25% of the company's outstanding shares. It wouldn't have been surprising if Aptinyx's share price had fallen even more than it actually did with that level of dilution.
The timing for Aptinxy's announcement of a public stock offering was smart, however. On Monday, the company reported positive results from its first phase 2 study evaluating NYX-783 in treating post-traumatic stress disorder (PTSD). Aptinyx's shares soared 55% on the encouraging clinical update.
Aptinyx expects to use the proceeds from its public offering to advance its pipeline candidates. In particular, the company hopes to begin a pivotal study of NYX-783 in treating PTSD next year. It also anticipates resuming the phase 2 study of NYX-2925 in treating diabetic peripheral neuropathy (nerve damage that can be a complication of diabetes) either later this year or in early 2021.