Here's Why Shares of Passage Bio Dropped Today
Shares of Passage Bio (NASDAQ: PASG) were down by 13.7% at 2:20 p.m. EST after the biotech disclosed pricing of its secondary offering of 7 million shares at $22 per share. The gene therapy company will gross $154 million from the stock sale, although the capital raise could increase if the underwriters use their 30-day option to acquire an additional 1.05 million shares.
Passage's share price closed at $22.82 Thursday, so a reset in valuation seems reasonable since investors in the secondary offering were only willing to pay $22 per share. That the price slipped substantially below that has to do with investors getting diluted through the sale of new shares.
Regardless of its near-term impact on the share price, raising money now was likely still a good idea. Passage ended the third quarter with $335.7 million in the bank, but it has plans to initiate three clinical trial programs in the first half of this year. Building up a nest egg ahead of that is a smart move, especially with shares trading more than 20% higher than the company's IPO price of $18.
Source Fool.com
