Shares of Odonate Therapeutics (NASDAQ: ODT) were soaring 23.1% as of 11:23 a.m. EDT on Friday. The drugmaker announced after the market closed on Thursday the pricing of a public offering of more than 5.6 million shares at $14.25 per share.
Normally secondary stock offerings cause shares to fall, so why did Odonate Therapeutics stock rise? There could be a couple of factors at work.
Odonate announced the stock offering on Wednesday. The price Odonate announced Thursday was only around 4% below the stock's closing price. Investors could have been bracing for a much lower offering price.
The biotech stock plunged more than 50% earlier this week after Odonate reported results from a phase 3 study evaluating tesetaxel in treating patients with metastatic breast cancer. The company stated that the drug, in combination with capecitabine, achieved its primary endpoint of improved progression-free survival. However, investors were concerned with tesetaxel's safety profile. It's quite possible that today's big jump stems from some investors buying the stock in the belief that the sell-off earlier this week has now run its course.
Odonate expects its public stock offering to close early next week and raise gross proceeds of around $80 million. The main thing to watch with the company is its progress toward obtaining FDA approval for tesetaxel. Odonate plans to file for FDA approval in mid-2021.
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