Why MoonLake Immunotherapeutics Stock Wilted on Wednesday
The biotech is floating a relatively sizable secondary share issue.
By Eric Volkman
MoonLake Immunotherapeutics (MLTX 5.75%) clearly wasn't immune to negative investor sentiment on Wednesday. The clinical-stage biotech's equity slumped by almost 6% during that trading session, mainly due to a secondary share issue announced by the company.
A potential $200 million move
Late Tuesday night, MoonLake announced the pricing of the share issue, adding that it had been upsized.
MoonLake is floating 9 million class A ordinary shares at $20 apiece. Certain investors in the offering can also opt to purchase pre-funded warrants granting the right to obtain up to 1 million of those shares. The price of those warrants is slightly under that $20. The underwriters of the issue have been granted a 30-day option to collectively buy an additional 1.5 million shares.
MoonLake should garner $180 million to $200 million in gross proceeds from this offering. Previously, it was targeting a minimum of $150 million.
The company said it will use the funds raised to continue research and development, pre-commercialization, and commercialization activities for its leading drug candidate, sonelokimab. The medication, in late-stage development, is intended for multiple autoimmune indications.
Worried about dilution
MoonLake currently has just under 74.6 million of those shares outstanding, so the new issue is clearly dilutive.
Investors rarely react positively to dilution, but it's not unusual for a biotech in the final stages of drug development to go on the hunt for fresh funding. Few aspects of bringing a treatment to market are cheap or easy, after all. Instead of being spooked by dilution, I'd be encouraged by the fact that management is seeking capital for its sonelokimab efforts.