What happened
Shares of Scholar Rock Holding Corp. (SRRK 4.08%) skyrocketed as much as 35% early Thursday, then settled to trade up 13.7% as of 3 p.m. ET after the company announced an expansion into treatments for cardiometabolic disorders. Scholar Rock simultaneously announced pricing for an upsized offering of common stock after the market closed yesterday.
So what
In a press release late Wednesday, Scholar Rock announced it will advance the development of its obesity treatment, dubbed SRK-439, based on preclinical data supporting the move. The company said it plans to initiate a phase 2 proof-of-concept trial in 2024, with a data readout expected in mid-2025 to inform further clinical development of SRK-439. Assuming all goes as planned, Scholar Rock will work toward an investigational new drug application (IND) submission in 2025.
"As a longstanding leader in targeting myostatin with a highly selective antibody platform, we are excited to advance our cardiometabolic program," stated Scholar Rock CEO Jay Backstrom, M.D., M.P.H. in a press release. "We have discovered multiple, highly selective myostatin inhibitors and see potential with SRK-439 to retain lean muscle mass, a concern that is commonly associated with weight loss strategies, including treatments currently on the market for obesity, a common, serious, and costly public health issue affecting adults and children globally."
Now what
In conjunction with the SRK-439 news, Scholar Rock announced pricing of an upsized public offering of 12,408,760 shares of common stock at a price of $6.85 per share -- equivalent to the biopharma stock's closing price on Wednesday -- pursuant to a shelf registration previously filed last November. When that offering closes in a few days (expected on Oct. 16), it will generate gross proceeds to the company of roughly $85 million. Scholar Rock also granted the underwriters of the offering a 30-day option to purchase up to an additional 1,861,314 shares of common stock at the offering price.
For perspective, Scholar Rock ended the first half of 2023 with around $249 million in cash on its balance sheet, which was already enough to fund operations into 2025. This offering should extend that runway with the added flexibility of helping fund its new phase 2 trial to advance development of SRK-439.
In the end, Scholar Rock has plenty of work to do from here. But the promise of an expansion into obesity treatments is obviously good news, and the offering provided some incremental certainty of the company's ability to deliver on that promise.
