What happened

Shares of Homology Medicines (NASDAQ:FIXX) were sinking 17.8% lower as of 12:01 p.m. EDT on Wednesday. The decline came after the company announced the pricing of its latest public stock offering. 

So what

Biotech stocks usually fall after public stock offerings are announced. The issuance of new shares dilutes the value of existing shares. Just how much they fall depends on how much dilution is on the way.

DNA images with a healthcare professional in the background pointing to a part of DNA with a bright light appearing

Image source: Getty Images.

Neither Homology Medicines' press release nor its prospectus filed with the U.S. Securities and Exchange Commission (SEC) provided many details about the pricing of the stock offering. However, the company did explain that it plans to use net proceeds from the offering to advance the clinical testing of its pipeline candidates, expand its intellectual property portfolio, and potentially boost its manufacturing capacity.

The company is currently evaluating gene therapy candidate HMI-102 in a phase 2 study for treating genetic metabolism disorder phenylketonuria (PKU) in adults. It also has other experimental gene therapies in preclinical development.

Now what

Homology plans to advance two of its preclinical candidates into phase 1/2 studies this year. HMI-203 is an experimental gene-editing therapy that, like lead candidate HMI-102, targets PKU. HMI-203 is another investigational gene therapy that targets rare genetic disorder Hunter syndrome. 

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