Shares of Aldeyra Therapeutics (ALDX -4.59%) were 8.3% lower as of 12:31 p.m. EDT on Wednesday. The decline came after the company announced plans for a $125 million public stock offering.
Public offerings usually cause stocks to fall because they dilute the value of existing shares. That's why Aldeyra's share price is tumbling today. But there's a flip side to the story that's positive. These offerings enable companies to raise additional capital.
Biotechs in particular tend to conduct public stock offerings after they report good news that drives share prices higher. Aldeyra announced great news on Tuesday with positive top-line results from a late-stage study evaluating reproxalap in treating allergic conjunctivitis (inflammation of the eyes caused by allergies).
The company plans to use the net proceeds from its public offering to prepare for a potential regulatory filing for reproxalap and for a commercial launch of the drug if it wins approval. Aldeyra also intends to use some of the proceeds to fund early-stage programs.
The next major move for Aldeyra is to meet with the Food and Drug Administration about submitting a New Drug Application for reproxalap. The company hopes to have this meeting in the second half of 2021.