What happened
Shares of CymaBay Therapeutics (CBAY 0.03%) were sinking 11.3% lower this week as of the market close on Thursday, according to data provided by S&P Global Market Intelligence. The decline extended a sell-off that began last week following the biopharmaceutical company's announcement of pricing for a public offering of stock and pre-funded warrants.
CymaBay issued more than 12.5 million new shares at a price of $17.13 per share. It also sold pre-funded warrants to buy 583,771 shares at a price of $17.1299 per underlying share and with an exercise price of $0.0001 per share.
So what
Public stock offerings are double-edged swords for companies. On the positive side, they help raise much-needed capital. In this case, CymaBay generated gross proceeds in the ballpark of $225 million. The downside, though, is that they cause a dilution in the value of existing shares.
However, even with the pullback that began last week and continued this week, investors have had a lot of reasons to like CymaBay in 2023. The biotech stock is still up more than 130% year to date.
This impressive gain is due to optimism about the potential for CymaBay's experimental drug seladelpar in treating primary biliary cholangitis (PBC), a chronic liver disease. The company announced positive results on Sept. 7, 2023, from a late-stage study of seladelpar. Not only did the drug prove to be both safe and effective in treating PBC, but it also significantly reduced itching associated with the disease.
Now what
CymaBay plans to move forward with filing for accelerated approval of seladelpar. The company has also already initiated a confirmatory phase 3b/4 clinical study to support anticipated post-marketing regulatory requirements.
