What happened

Shares of Legend Biotech (LEGN -3.96%) dropped 17.6% on Wednesday, falling more than $4 from the day before, though all the action came early. The stock, which closed at $48.54 on Tuesday, opened at $44 a share on Wednesday and fell to $39.37 early in the day before rebounding a bit. The stock is up 46% year to date.

So what

Investors reacted to the company's announcement on Tuesday that the clinical-stage biotech company intends to offer and sell $300 million of American depositary shares, each equaling two ordinary shares, in a public offering. This waters down the stock's value to current investors.

The company is slowly growing revenue, but because of rising costs, is still losing money.

A scientist in a laboratory inspects a blood vial.

Image source: Getty Images.

In the third quarter, the company reported revenue of $16.9 million, up 44% year over year. Through nine months, the company reported revenue of $50.8 million, up 45% over the same period last year. However, Legend also said it had a net loss of $124.8 million, or $0.43 a share, compared to $66.5 million and $0.25 a share, year over year. Over nine months, the company lost $297.9 million, or $1.07 per share compared to $245.7 million and $1.08 a share in the same period a year ago.

Now what

Legend is one of several companies looking at chimeric antigen receptor T-cell therapies to target B-cell maturation antigens (BCMA) to treat multiple myleloma, a cancer affecting plasma cells in bone marrow. Multiple myeloma is responsible for 10% of blood-related cancers.

On Monday, Legend fell from $51.06 to $50.67 despite announcing positive news regarding its phase 1b-2 CARTITUDE-1 study of ciltacabtagene autoleucel (cilta-cel). The drug is a CAR T-cell therapy seen as a potential one-time treatment for multiple myeloma. The company said the treatment showed a 98% overall response rate and 83% stringent complete response rate after almost two years of follow-up on trial participants.

A concern for Legend is that larger, better-funded companies such as Bristol Myers Squibb, Amgen, and Janssen, a subsidiary of Johnson & Johnson, are also targeting BCMA to treat multiple myeloma.

One positive for Legend is it has several therapies in phase 2 and phase 3 trials, meaning it could, in the coming year or two, get a positive influx of revenue.