What happened
Shares of Immunovant (IMVT -0.45%) were skyrocketing 75.1% higher this week as of 3:42 p.m. ET on Thursday, according to data provided by S&P Global Market Intelligence. Most of this big gain came after the company announced a public offering on Tuesday to sell 12.5 million shares.
So what
Usually, biotech stocks fall after the announcement of stock offerings. That's because the transactions dilute the value of existing shares. Immunovant is issuing 12.5 million new shares, representing roughly 10.7% of its outstanding shares.
In theory, Immunovant stock should have dropped around by close to that same percentage. So why did the drugmaker's shares take off instead? Probably because investors liked two details about Immunovant's stock offering.
For one thing, the price of the offering was encouraging. Immunovant's stock opened this week at $5.69 per share. The company is selling the newly issued shares at $6 per share. Even better, Immunovant already had buyers lined up. It revealed that Logos Capital, Deep Track Capital, Frazier Life Sciences, TCGX, BVF Partners L.P., Commodore Capital, and "an undisclosed healthcare specialist fund" agree to purchase the full allotment.
Investors seemed to love this strong vote of confidence in Immunovant's prospects. They also no doubt were glad that the company will now have $75 million in gross proceeds, enough to fund operations into the second half of 2025.
Now what
Now that it will be flush with cash, Immunovant plans to accelerate the development of pipeline candidate IMVT-1402 in treating autoimmune diseases. The company hopes to advance the experimental therapy into phase 1 clinical testing in early 2023. Immunovant also expects to announce results from a pivotal study of lead candidate batoclimab in treating myasthenia gravis in the second half of 2024.
