Three months after Achillion Pharmaceuticals Inc. said it had enough cash to operate through the middle of 2014, it has decided to issue another $125 million worth of stock.
The shares are to be offered at $8.40, and the company's proceeds are expected to be $118.5 million.
The stock was selling for $9.53 just before the announcement after the close of market Thursday, and immediately fell 12 percent. The new stock offering dilutes the value of current stockholders. Since then, the price has recovered somewhat, and closing price Friday was $8.86.
Achillion had $77.4 million of cash on hand at the end of 2012. The company expects to spend nearly $60 million in 2013, as it expects to burn 20 percent more cash compared to 2012 for operations, mostly on research and development.
The company is not allowed to discuss why it is seeking more capital, because there is a quiet period before a public offering of stock.
Achillion is doing trials of drugs that would treat Hepatitis C with pills, rather than the intravenous drugs now used that have significant side effects.
Gilead, a more established biotech firm based in California, is further along with the same strategy, and announced this month that since it had positive results from four phase 3 trials, it plans to file for FDA and European drug approvals before the end of June.
Achilllion estimates it will make similar filings in 2015.
CEO Michael Kishbauch told analysts Thursday that Achillion is one of the five most important drug companies in Hepatitis C development, and, he said: "Case can easily be made, we believe, for top three, with the others all being large household names in contrast to this modestly sized company up here in New Haven, Connecticut. This, of course, puts us in an interesting position as regards to upside potential for the company and its shareholders."
Achillion's stock has traded between $5.42 and $11.36 in the last year, and is down nearly 18 percent from a year ago.Copyright © 2015, The Baltimore Sun