What happened
Intra-Cellular Therapies' (ITCI -1.23%) stock could have used a little financial therapy on Tuesday. The neurologic drugs-focused biotech saw its shares decline by over 14% on the day, following news that it is entering a new round of capital-raising.
So what
After market hours on Monday, Intra-Cellular announced that it is floating a $400 million issue of its common stock. The underwriters of the issue -- which include JPMorgan Chase unit J.P. Morgan and Bank of America Securities -- have been granted a 30-day option to collectively purchase up to an additional $60 million worth of the shares.
Image source: Getty Images.
Intra-Cellular gave quite a bit of detail as to how it would utilize the funds raised in the offering. They will be deployed to fund the commercialization efforts of the company's Caplyta, a treatment for schizophrenia and bipolar depression. Some will also be channeled toward furthering the development of its pipeline drugs.
The company did not specify exactly how many shares would be offered in the flotation. Monday's closing stock price was $52.01; at that level, $400 million plus the potential $60 million for the underwriter option would equate to over 8.8 million shares.
Now what
At the moment, Intra-Cellular has nearly 81.5 million shares outstanding. So while the new stock issue isn't overwhelmingly dilutive compared to others that have been floated in the biotech sector, it isn't exactly small, either.
The new financing move could also illustrate for some investors that the company is struggling with key fundamentals; it continues to be in the red on the bottom line, with deeper-than-expected losses in recent quarters.
