What happened
Global Blood Therapeutics (GBT) shares took a big dive on Tuesday, sliding to close more than 14% lower. Investors weren't happy that the company is launching a big new round of financing.
So what
Tuesday morning, Global Blood Therapeutics announced that it is floating a $250 million issue of convertible senior notes. The company said it intends to also grant the underwriters of the issue an option to collectively purchase up to an additional $37.5 million in aggregate principal amount of these securities.
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Global Blood Therapeutics has not yet priced the offering. It said it will determine the interest rate, conversion details, and other aspects of the notes when it does so. It did say that the notes will mature in 2028 if not converted, and their interest is to be paid semi-annually.
In terms of its operations, the company said it intends to use its share of the issue's proceeds "for the continued commercialization of Oxbryta and the clinical development of Oxbryta and [Global Blood Therapuetics'] product candidates, and for other general corporate purposes."
The company said that the latter might include acquisitions, "strategic transactions," and other investments.
Oxbryta is the company's one commercialized product. It is a treatment for sickle cell disease in patients aged 12 and older.
Now what
Investors typically get spooked by capital/debt issues if they're disproportionally large. At $250 million, Global Blood Therapeutics' isn't overwhelming, but it's not exactly small either. That amount is more than double the company's nearly $225 million in long-term debt at the end of its most recently reported quarter, and if most or all of the notes are converted they'll be dilutive to its current $1.6 billion market cap.
