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8 Biotechs Tapping Secondary Markets for $3 Billion

Company stocks drop on dilution, but monies could benefit shareholders down the line

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Barry Cohen
May 19, 2020
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Investors reacted unfavorably to plans by eight biotech companies to raise nearly $3 billion by issuing new stock and debt.

From the beginning of the week, the share price drops of the fledgling companies ranged from a low of about 4% for bluebird bio Inc. (

BLUE, Financial) to a high of 32% for tiny Gamida Cell Ltd. (GMDA, Financial).

It’s no surprise that shareholders didn’t like the news. Issuance of new shares or debt means the percentage of their ownership in the company is reduced, or diluted.

The most notable action was taken by Moderna (

MRNA, Financial), whose shares rose $13 to $80 Monday on the news that its experimental Covid-19 vaccine had shown promising results in a small clinical trial. The stock eased to $71.67 Tuesday after the company announced it would offer more than 17 million shares at a price of $76 per share.

Moderna’s offering is expected to raise more than $1.34 billion, which the company will use to fund further development of its vaccine and set up a distribution network for the immunization both in the United States and elsewhere around the world. The monies will also be used for drug discovery in the company’s other therapeutic areas.


Shares offered (millions)

Price per share

Proceeds ($ millions)





Bluebird bio




Turning Point




Gossamer Bio (

GOSS, Financial)




Krystal Biotech (

KRYS, Financial)




Clovis Oncology (

CLVS, Financial)




Gamida Cell Ltd.




Bellerophon (

BLPH, Financial)




Source: Companies

Bluebird bio plans to raise $500 million in its offering of more than 9 million shares at $55 each. Shares of the Cambridge, Massachusetts-based company have dipped slightly in the past two days but recovered to close Tuesday at nearly $59. Bluebird’s focus is on developing transformative gene therapies for severe genetic diseases and cancer. Last week, the company announced that its partner, Bristol-Myers Squibb Co. (

BMY, Financial), will pay the company $200 million to buy out future royalty obligations of its two jointly developed cancer therapies.

The third-biggest raise belongs to Turning Point Therapeutics Inc. (TPTX). The oncology company expects to rake in $325 million by selling about 5.5 million shares at $60 a share. Its share price declined about 9.5% to just under $58 Tuesday. Even with the dip, the stock has made a nice recovery from mid-March, when it traded in the mid-$30s.

Moderna’s vaccine news helps everyone in the industry, Brad Loncar told BioPharma Dive. The CEO of Loncar Investments and a biotech investor said the industry is capturing the headlines thanks to the coronavirus, and companies are taking advantage of the high profile to tap the public markets.

Pointing to the Moderna offering, Loncar said, “Offering new stock on the heels of clinical trial data is a well-worn path in biotech, which typically features companies with high cash burn rates and years of accumulated deficits.”

Investors shouldn’t necessarily sour on companies who do secondary offerings. They may turn out to be a good thing down the line.

As pointed out in an article on NASDAQ, dilution can enhance shareholder value. Of course, that depends on whether company management uses the funds prudently to guide its product candidates though the costly and complicated testing and regulatory maze necessary to bring a drug to market.

Disclosure: The author holds a position in Gossamer Bio and Bristol-Myers Squibb.

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