Raking in net proceeds of $57 million, Rigel Pharmaceuticals Inc. more than doubled its cash reserves after pricing a common stock offering.
The South San Francisco-based company sold about 2.9 million shares at $20 apiece Friday, a 7.5 percent discount to their value at market close a day earlier. Other selling stockholders offered 315,000 shares, and Rigel offered its underwriters an overallotment option for up to about 475,000 shares.
On Friday, the stock (NASDAQ:RIGL) dropped $1.77 to close at $19.74 in heavy trading - volume topped 1 million, well over its average of about 32,000 shares per day.
"We've got two products in the clinic at this time, and they're going into Phase II, and we have two more products moving into the clinic in the later part of this year," Jim Welch, Rigel's chief financial officer, told BioWorld Today. "We wanted to make sure we had enough cash in our runway to continue progressing on those projects."
The company recorded an $11.9 million net loss in the three-month period ended Dec. 31, at which point it reported $46.5 million in cash, cash equivalents and available-for-sale securities. Rigel ended the year with about 14.8 million shares outstanding, considerably less than earlier in 2003, the result of a 1-for-9 reverse stock split effected in June.
More than a month before the reverse split, the company raised $46 million through a sale of about 72 million shares at 64 cents apiece. (See BioWorld Today, May 1, 2003.)
Welch could not explain Friday's high trading volume, noting that the equity sale was the only news released by Rigel. But he pointed to uses of the recent funding relative to the company's drug development programs going forward.
Of near-term note, a compound labeled R112 is scheduled to move into a Phase IIb study for allergic rhinitis next quarter. Another clinical-stage candidate, R803, is an antiviral product slated to begin a Phase I/II study for hepatitis C next quarter, as well.
Other future clinical trial plans for Rigel include a Phase I study of R406 for rheumatoid arthritis in the second half of this year, as well as initial human studies of an unnamed compound for asthma.
New York-based Credit Suisse First Boston is acting as the lead manager for the offering, which is expected to close Wednesday. Co-managers include Needham & Co. Inc., also of New York; Thomas Weisel Partners LLC, of San Francisco; and Fortis Securities Inc., also of New York.
"This was what we felt was best for the company, to be able to raise equity like this," Welch said. "And hopefully it will increase some flow to the stock as well."