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Why Shares of Fibrocell Science Jumped Today

By Brian Feroldi - Jul 22, 2015 at 12:52PM

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Shares of clinical stage gene therapy company Fibrocell Science rose sharply today on details related to the company's secondary offering. Is the move meaningful, or just market noise?

What: Shares of Fibrocell Science (FCSC), a clinical stage gene-therapy company with a focus on rare skin and tissue diseases, jumped more than 10% today after the company released pricing details of their recently-announced secondary stock offering.

So what: The company will be selling 2.6 million shares of common stock at a price of $5.80 per share and expects to net about $13.6 million from the offering. The company could also sell an additional 400,000 shares if underwriters choose to exercise their option, which would net the company additional capital. Fibrocell intends to use the proceeds of this secondary offering to fund their clinical and preclinical development programs and for other general corporate purposes.

Now what: This secondary offering appears to be well timed by management, as shares of Fibrocell have more than doubled since the start of the year, and investors are cheering the news that the company is raising capital at favorable prices.

FCSC Chart

Fibrocell needs this capital to continue to fund additional clinical work for its lead product candidate azficel-T, which is currently in phase II development and is being studied as a possible treatment of chronic dysphonia resulting from vocal cord scarring. Fibrocell also recently announced that it submitted an IND application to the FDA for FCX-007, its lead orphan gene-therapy product candidate, which is for the treatment of recessive dystrophic epidermolysis bullosa and is currently in the pre-clinical stage.

As is to be expected of a company still in clinical development, Fibrocell is losing money from operations, having burned more than $25 million in 2014. As of March 31st, Fibrocell had $33 million in cash on its balance sheet, and when combined with this most recent capital raise this appears to be enough to fund the company for another two years or so if current spending rates persist.

Fibrocell's technology looks intriguing, and if it can successfully navigate the clinical and regulatory process it could offer hope to an estimated 125,000 patients in the U.S. with chronic dysphonia. However, with a long development road ahead of the company and a likely need to raise additional capital, Fibrocell shareholders will still have to wait years before the company will possibly begin to see any revenue from operations and should proceed with caution.


Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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