Shares of clinical-stage biopharmaceutical company Humanigen (HGEN -42.10%) were falling sharply on Wednesday following the company's announcement of the pricing of a public offering of common stock. Naturally, investors aren't thrilled with the prospect of Humanigen diluting its shareholders. As of 2:06 p.m. EDT, the company's stock was off by 15.3%, after having been down by as much as 16.9% earlier in the session.
The timing of Humanigen's public offering of common stock probably isn't random. On Monday, its stock price skyrocketed by more than 50% after it announced positive news regarding one of its pipeline candidates, lenzilumab. The hopeful COVID-19 treatment proved both safe and effective in a phase 3 clinical trial when taken in combination with other treatments and steroids. Specifically, patients treated with lenzilumab and other medicines were 54% more likely to survive without the assistance of a mechanical ventilator than those treated with a placebo and other drugs.
Humanigen will soon seek emergency use authorization from the Food and Drug Administration for lenzilumab. No doubt the healthcare company will use the proceeds of the pending stock offering to fund the launch of this product. The company intends to sell 5 million shares of its common stock for $18.50 per share -- and after their decline Wednesday, Humanigen shares were trading slightly below that level. The drugmaker will also grant underwriters a 30-day option to purchase up to an additional 750,000 shares at the same price. Humanigen expects to collect $92.5 million in gross proceeds from the transaction, which is set to close on April 5.
Regulatory approval could come relatively soon for lenzilumab. Once it does, it will likely send Humanigen's stock soaring, especially considering the company currently has no products on the market. In other words, despite Wednesday's slump, the drugmaker still looks poised to outperform the market, at least in the short term.