Although most stocks generally decline on a secondary offering due to dilution, FibroGen Inc (NASDAQ:FGEN) is one of the exceptions today. Shares of the biotech have surged $3.50 per share, or 15%, on news that the company has priced an offering of 5.228 million shares at $22.95 a piece. Leerink Partners and Stifel are the joint book runners of the offering, which is expected to close on April 11, 2017. The secondary is expected to raise gross proceeds of $120 million, which presumably will help finance some R&D and potential commercialization down the road.
Although it has a lot of cash already, FibroGen Inc (NASDAQ:FGEN) management is playing it safe and adding more while its stock price is relatively high so that the company’s drug candidates such as pamrevlumab and roxadustat have all the support/resources it can get. If both drugs are approved and are commercial hits, FibroGen has substantial upside ahead.
What Does The Smart Money Sentiment Say?
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Smart money sentiment was relatively stable around FibroGen in the fourth quarter. Of the over 740 funds we track, 16 elite funds had a bullish position in FibroGen Inc (NASDAQ:FGEN) at the end of December, up one from the previous quarter. Lei Zhang‘s Hillhouse Capital Management was one of the bulls, almost doubling its stake to one million shares at the end of 2016.
The Bottom Line
FibroGen Inc (NASDAQ:FGEN) shares have surged higher due to a secondary offering. For more reading, check out ‘11 Most Sold Non Prescription Drugs‘.