Shares in San Diego’s Halozyme Therapeutics (Nasdaq: HALO) dropped sharply on Wednesday after the company announced it was launching a new offering of 7.7 million shares priced at $13 per share, compared to Wednesday’s opening price of $13.55.
The stock dropped as low as $12.78, although it has since rebounded to around $13.20, even though the offering, which will close on Feb. 10, gives underwriters a 30-day option to buy an additional 1.2 million shares at the lower price.
Some investors may have been assuaged by a report by analysts at the Prohost Biotechnology newsletter who say the stock offering will be worthwhile over the long haul. The money will be used to help fund Phase 2 testing of the company’s PEGPH20 program, aimed at treating pancreatic, breast, colon, prostate and other cancers.
“Is the project worth financing? Our answer is yes,” said the newsletter, in a column reprinted on the Seeking Alpha investment website. The column noted that the program has had positive results in Phase 1 tests.