What happened
Shares of Axsome Therapeutics (AXSM 0.27%) were down more than 10% as of 3:45 p.m. ET Wednesday after the company announced it is offering 3 million shares at $75 each in a stock sale worth $225 million. The stock is down more than 3% this year.
So what
The biopharmaceutical company focuses on therapies to treat central nervous system disorders. Investors rarely like stock sales because they dilute the stock's price. In this case, the company is offering shares at a 10% discount to what the stock's closing price was on Tuesday.
The move shouldn't be a surprise. The company needs to fund development of its late-stage therapies as well as help the commercialization of its products, antidepressant therapy Auvelity and sleep disorder drug Sunosi. The company reported revenue of $94.6 million in the first quarter after having no revenue in the same period a year ago. It lost $11.2 million compared to a loss of $39.6 million in the first quarter of 2022.
Now what
Axsome is a growth company and it will need money to grow. It had $246.5 million as of the first quarter, but it has several milestones ahead that will increase expenses. It said it intends to resubmit migraine therapy AXS-07's New Drug Application (NDA) to the Food and Drug Administration in the second half of this year. It also plans an NDA for fibromyalgia drug AXS-14 by the fourth quarter of 2023. The company also has an Alzheimer's disease therapy, AXS-05, that has shown promise in late-stage trials to reduce Alzheimer's-related agitation and to help with smoking cessation.
