Strongbridge Biopharma plc. (NASDAQ:SBBP)
Strongbridge Biopharma plc. (NASDAQ:SBBP) shares fell 18.7% after the rare disease therapeutic developer announced the pricing of a share offering. The company has priced an underwritten public offering of 4 million ordinary shares at a price of $6.25 a share.
SBBP Share Offering
The commercial stage biopharmaceutical company has also granted underwriters a 30-day option to purchase an additional 600,000 ordinary shares. Strongbridge Biopharma plc. (NASDAQ:SBBP) expects gross proceeds of $25 million. The offerings should close on or about October 6, 2017, subject to satisfaction of customary closing conditions. Pricing of the offering $6.25 a share also did not go well with investors, as it represented a discount from the previous day closing price of $7.50 a share.
Wednesday’s sell-off pushed the stock to a key support level. However, Strongbridge Biopharma plc. (NASDAQ:SBBP) is still up by more than 100% for the year as it continues to trade in a strong uptrend.
Cash Burn Concerns
The price drop also came on growing concern over the company’s cash burn rate. Strongbridge Biopharma plc. began the year with $67 million in cash – of which it has already burned half. Investors fear that the company may be forced to offer more shares in the future in a bid to keep up with its spending.
Strongbridge Biopharma plc. (NASDAQ:SBBP) intends to use net proceeds from the underwritten public offering to expand commercial opportunities for Keveyis, its FDA approved product for primary periodic paralysis. Purchased from Taro Pharmaceuticals last year, the product generated $1.5 million in the second quarter.
Keveyis expansion could accelerate Strongbridge Biopharma plc. (NASDAQ:SBBP) cash burn over the next several quarters. The company has already indicated that it plans to spend part of the net proceeds from the offering for the development of Recorlev and veldoreotide. There are also plans to carry out acquisitions in addition to technologies that would accelerate topline growth.
Strongbridge Q2 Financial Results
Separately, Strongbridge Biopharma plc. (NASDAQ:SBBP) reported second quarter financial results that met Wall Street expectations. The company reported a net loss of (-$30.2) million or (-$0.34) a share which was in line with analyst’s expectations. Revenue in the quarter totaled $1.5 million compared to analysts’ expectations of $836,000.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.