What happened
Shares of Ocugen (OCGN +5.98%) tripled on Monday after the biopharmaceutical company said it conducted a stock offering at a substantial premium to its closing price on Friday.
So what
Ocugen announced on Tuesday that it struck a deal with India-based vaccine developer Bharat Biotech to potentially bring Covaxin, a COVID-19 vaccine candidate, to the U.S. Following the announcement, investors were bracing for dilution. Clinical trials can be expensive, and Ocugen ended the third quarter with only $19.3 million in cash reserves. So, it was only a matter of time before the biotech would need to sell stock to obtain the cash it needed to fund Covaxin's development in the U.S.
Ocugen's stock price soared on Monday. Image source: Getty Images.
What was surprising, however, was that Ocugen was able to price its shares at $7.65, or roughly 46% higher than the price at which they closed on Friday. Ocugen is expected to raise approximately $23 million via the sale of 3 million shares in a direct offering to institutional investors. The sale is expected to close on Feb. 10.
Now what
With Ocugen's stock rising far above its direct offering price, investors are signaling their optimism that the company will be able to use its newfound cash to fund Covaxin's clinical trials and eventually gain emergency use authorization for the COVID-19 vaccine candidate in the U.S. If it can do so, Ocugen would receive a 45% share of the drug's U.S. profits.
