Investing.com -- Shares of 89bio, Inc. (NASDAQ: ETNB ) tumbled 6% after the company announced its plans for an underwritten public offering of common stock and pre-funded warrants. The clinical-stage biopharmaceutical company, which specializes in liver and cardiometabolic diseases, stated that it aims to raise $250.0 million through the sale of its securities. Additionally, the firm may offer underwriters a 30-day option to buy up to an additional $37.5 million of its common stock at the public offering price, minus underwriting discounts and commissions.
The decline in 89bio's stock price reflects investor reaction to the potential dilution of shares due to the proposed offering. When a company issues additional stock, it can lead to a reduction in the value of existing shares, causing concern among shareholders.
The company has indicated that the funds raised from the offering will be allocated to support ongoing clinical trials and development of its lead candidate, pegozafermin, as well as covering manufacturing costs and other general corporate expenses, such as working capital and operating expenses.
Goldman Sachs & Co (NYSE: GS ). LLC, Leerink Partners, and BofA Securities are leading the offering as book-running managers, with Cantor also serving as a book-running manager. The announcement comes at a time when 89bio is actively progressing in its clinical endeavors, but the market's immediate response has been cautious due to the implications of stock dilution.
The offering is subject to market conditions, and there is no certainty regarding the completion or the terms of the offering. All securities in the offering are being offered by 89bio, signaling the company's commitment to advancing its therapeutic pipeline and supporting its financial needs for future growth. However, investors will be closely monitoring the impact of this offering on the company's stock performance in the coming days.
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