For all development-stage drugmakers in need of cash, performing a dilutive share offering is always a tricky gambit. Last week's $90 million stock offering by Seattle Genetics
Profitable companies may be able to pay little attention to their share price, but development-stage drugmakers in need of cash must always monitor their underlying equity's ups and downs. Aside from partnering out its drugs, a stock or similar convertible debt offering is one of the principal ways a fledgling drugmaker can raise cash.
With a looming recession, and signs of upcoming strife for the stock market, now is an ideal time for development-stage drugmakers to raise cash before a further decline in the broader markets topples their share prices as well. Fellow development-stage pharma Theravance
In one of last year's more lucrative early-stage drug deals, Seattle Genetics tried to reduce its burn rate and raise some cash via the partnership route. In exchange for $60 million, last January it gave Genentech
Biopharmaceutical development isn't cheap, and Seattle Genetics' share offering last week will give it enough cash to continue operating for at least an additional year beyond its current cash levels. Now, even if Seattle Genetics' share price is hurt by any worldwide economic woes, it won't have to worry about making an offering at fire-sale prices in the near future.