Story
Viking Therapeutics Stock Falls After $500 Million Capital Raise
Summary
Obesity drug developer Viking Therapeutics saw its shares decline after completing a $500 million offering, with a report from Bloomberg indicating one investor acquired a third of the new stock.
Viking Therapeutics Inc. (NASDAQ: VKTX) completed a $500 million capital raise, but its shares fell sharply on Thursday amid reports of highly concentrated demand for its new equity.
Details of the Offering
The financing was conducted through a two-part deal, according to a company statement. The transaction included:
- A $275 million stock offering.
- An additional $225 million raised from the sale of six-year convertible bonds.
The capital raise is intended to bolster the balance sheet of the company, which is developing treatments in the competitive obesity drug market.
Concentrated Investor Demand
AdBloomberg reported that the equity portion of the deal, which was increased in size due to strong interest, drew significant attention from a small group of investors. According to people familiar with the matter cited in the report, one investor purchased approximately one-third of the shares sold.
The same sources noted that the stock offering was heavily concentrated, with more than 75% of the shares allocated to just 10 investors. Overall demand for the offering was reportedly several times the number of available shares.
Market Reaction
Following the announcement and details of the capital raise, shares of Viking Therapeutics fell 15% in Thursday's trading. Large secondary offerings can exert downward pressure on a company's stock price as the issuance of new shares dilutes the ownership stake of existing shareholders.
A consortium of banks managed the deal. Morgan Stanley, JPMorgan Chase & Co., Jefferies Financial Group Inc., Leerink Partners, and William Blair handled the convertible bond offering. Raymond James Financial Inc. joined that group for the stock sale.
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