Here's Why Myovant Sciences Jumped Today
What happened
Shares of Myovant Sciences (NYSE: MYOV) rose as much as 12.6% today after the company reported the pricing of a public stock offering announced the previous day. While shares were clobbered when the clinical-stage pharma company initially reported the dilutive fundraising efforts, the pricing announcement today provides a bit of good news.
Specifically, the company says it now expects to raise $125 million in gross proceeds, up from $120 million previously. That suggests Myovant Sciences was able to issue shares at a higher price than previously expected, which hints that there was healthy appetite for the company's shares. The news could get better still. As is customary during public stock offerings, the company has allocated an additional batch of shares, which could now raise $15.6 million in additional gross proceeds instead of the previously expected $15 million.
As of 2:08 p.m. EDT, the stock had settled to a 9.1% gain.
So what
There seem to be enough investors willing to bet on the late-stage pipeline of Myovant Sciences, which expects data readouts from four phase 3 clinical trials by the end of 2019. That potential, and the fact that the stock has lost 40% of its value since the beginning of the year, helps to make the pharma company an intriguing speculative investment.
The company saw shares fall in mid-May when it announced positive late-stage results for its uterine fibroid treatment, although it's not clear why, considering the drug swept all primary and secondary endpoints in the trial. Wall Street simply appears to be taking a cautious approach until a second phase 3 trial for the indication reports data in Q3, which will determine if the company can file for approval before the end of the year and, importantly, how it stacks up to competing experimental treatments from AbbVie and ObsEva.
Now what
Myovant Sciences ended March with $156 million in cash and cash equivalents and seems well positioned to compete in the underserved uterine fibroid population. The latest capital raise will help it to hit the ground running in the crowded race to deliver a safe and effective treatment to patients. Investors with an appetite for risk might want to give the company's pipeline a closer look, while also keeping an eye on competitors.
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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.