Story
REGENXBIO Shares Fall 12% on Planned $100 Million Stock Offering
Summary
Shares of gene therapy firm REGENXBIO Inc. dropped sharply in after-hours trading after the company announced its intent to raise $100 million through a public offering of common stock, a move that would dilute existing shareholder value.
Shares of REGENXBIO Inc. (NASDAQ: RGNX) plunged 12% in after-hours trading Thursday following the gene therapy company's announcement of a planned $100 million public stock offering.
Details of the Offering
REGENXBIO stated its intention to offer and sell the common stock in an underwritten public offering, according to a company statement. The completion, timing, and terms of the offering are subject to market and other conditions.
The company also plans to grant the underwriters a 30-day option to purchase up to an additional 15% of the common shares sold in the offering. Morgan Stanley, J.P. Morgan, Leerink Partners, and Mizuho are serving as the joint book-running managers for the deal.
AdMarket Impact and Dilution Concerns
The sharp decline in the company's stock price reflects a typical market reaction to secondary offerings. When a company issues new shares, it increases the total number of shares outstanding, which dilutes the ownership percentage of existing shareholders.
This potential for dilution often puts immediate downward pressure on a stock's price, as investors anticipate their stake in the company will be reduced. REGENXBIO noted in its announcement that there is no assurance as to whether or when the offering may be completed.
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