Over the course of the past few months, the stocks of companies in the pharmaceutical or biotech industries have performed reasonably well, and hence, it is important for investors to keep an eye out for the latest gainers from those sectors. One such stock to have made a major move on Wednesday was that of Pacific Biosciences of California Inc (NASDAQ:PACB).
Public Stock Offering
The rally in the stock came about after the developer of gene sequencing systems made a major announcement with regards to a public stock offering. The stock soon surged by as much as 23.50% as investors pile on to it and perhaps it could be a good idea for investors to look at little more closely into Pacific Biosciences.
On Wednesday, Pacific Biosciences announced that it was going to have a public stock offering and that was going to include in excess of 19.4 million shares in the company. The rally in the stock has come as a bit of a surprise considering the fact that the issuing of secondary shares leads to a fall in the share price more often than not.
At the end of the day, the issuing of more shares dilutes the stock and hence it usually leads to a fall. However, it seems that the reason why the Pacific share did not sink is due to the fact that the issue price was set at $4.47 a share, which is the same level as the stock’s closing price on Tuesday.
Secondary offerings are generally priced at a lower level than the current market price and Pacific’s pricing indicates that it is confident that investors would be willing to buy up these shares at that price. The company aims to raise as much as $86.9 million from this share offering and the proceeds are going to be used for research and development, product launches, expansion of commercial infrastructure, and other general expenses.
However, it should also be noted that the company might also use some of the proceeds to make acquisitions. Hence, the capital raise could actually end up being a vital one in the larger scheme of things. The offering will close on August 14 and after September 30, the company will also be entitled to a $98 million payout owing to the failed merger with Illumina. Earlier on in the month, the company released its second fiscal quarter financial results and recorded a 14% year on year decline.
Neither PSN nor its owners, members, officers, directors, partners, consultants, nor anyone involved in the publication of this website, is a registered investment adviser or broker-dealer or associated person with a registered investment adviser or broker-dealer and none of the foregoing make any recommendation that the purchase or sale of securities of any company profiled in the PSN website is suitable or advisable for any person or that an investment or transaction in such securities will be profitable. The information contained in the PSN website is not intended to be, and shall not constitute, an offer to sell nor the solicitation of any offer to buy any security. The information presented in the PSN website is provided for informational purposes only and is not to be treated as advice or a recommendation to make any specific investment. Please consult with an independent investment adviser and qualified investment professional before making an investment decision.