Investors were not kind to Point Biopharma Global (PNT 0.79%) on Wednesday. The specialty biotech saw its share price crumble by more than 12% on the day, in sharp contrast to the marginal gain of the S&P 500 index. The major culprit was a new financing move announced by the company.
This morning, Point Biopharma priced the secondary share issue, which it announced the previous day that it was floating. The biotech is issuing 13.9 million shares of its common stock at $9 apiece. That's well under Tuesday's close of $10.18, hence the investor sell-off.
As is standard practice with secondary stock flotations, Point Biopharma has also granted the issue's underwriters a 30-day option to purchase additional shares. Collectively they will be able to buy up to nearly 2.09 million of these securities.
The company is estimating that its net proceeds from the issue will be slightly over $117 million, which could rise up to $135 million if the underwriters exercise their option. Point Biopharma said in the issue's prospectus that it aims to use these funds to finance its clinical research and development efforts, in addition to "working capital and other general purposes."
It added that it might temporarily use the monies for an assortment of "capital preservation instruments" like certificates of deposit.
Point Biopharma expects that the share offering will close on or about Friday, Sept. 16. It's likely not going to favor existing shareholders, though. In addition to that relatively low sale price, the new chunk of shares will be dilutive, as the company has barely over 90 million common-stock shares currently outstanding.