Share Offerings Weigh on BioHealth Shares
Some secondary offerings are good for the existing holders and some are not. Adding cash to the coffers is good when a company can take advantage of a high share price when they need to raise long-term growth capital. But there is also the type of secondary offering that is just private equity or private investors selling shares after a bg run. This morning we have seen three stock offerings in drug and biotech stocks, and there is some good and some bad in here.
BioCryst Pharmaceuticals, Inc. (NASDAQ: BCRX) is getting hit this morning after the company sold 5 million shares in a secondary offering at $9.75 per share via Morgan Stanley, J.P. Morgan, and Oppenheimer. After 10:15 AM EST we have seen 2.5 million shares trade, making this one almost a full-day’s volume (2.9 million on average). This one is down 6.3% at $9.74 and the 52-week trading range is $0.85 to $13.47. This offering is under an existing shelf registration when the company filed to raise up to $57 million. Gross proceeds from this offering before fees and commissions is $48.75 million.
Novavax, Inc. (NASDAQ: NVAX) is trading down this morning on its 6.8 million share public secondary offering which priced at $3.30 per share through Piper Jaffray and Lazard Capital Markets. We have seen only 2.8 million shares so far this morning and the stock is down 10.6% at $3.37. Average volume is now over 6 million shares and the 52-week trading range is $0.52 to $7.79. This is just over $22.4 million in gross proceeds, and the company noted that it would net out $21 million.
Warner Chilcott plc (NASDAQ: WCRX) was the big sale today. The drug company priced a 20 million share secondary offering of common stock at $22.92 per share via Goldman Sachs, Morgan Stanley, Credit Suisse, and JPMorgan. This is not for the company’s benefit as selling shareholders include funds affiliated with Bain Capital Partners, DLJ Merchant Banking, J.P. Morgan Partners, Thomas H. Lee Partners, and certain other institutional investors and members of the company’s senior management. WCRX will not receive any proceeds from the sale of the shares, but it is still paying for the expenses of the offering under an existing agreement. This was a very low discount compared to the $23.15 close yesterday, and frankly it is sort of surprising that shares are only down 1.8% at $22.71. That is a new supply of $458 million in stock which has been dumped on the market.
JON C. OGG
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