For the third day in a row, shares of CymaBay Therapeutics (NASDAQ: CBAY) enjoyed a very healthy gain in price. That came on the announcement of a capital-raising effort by the company. Ultimately, CymaBay stock closed Monday more than 5% higher; by comparison, the S&P 500 index managed only a 0.7% increase.
Monday morning, CymaBay announced that it had floated a $150 million issue of common stock and warrants. The clinical-stage biotech said it intends to grant the offering’s underwriting syndicate, led by BTIG, a 30-day option to purchase an additional 15% of the amount of shares in the issue. These shares include stock that undergirds the pre-funded warrants.
CymaBay said that the funds raised will be channeled into the development of its investigational drug seladelpar, which targets a rare chronic inflammatory liver affliction called primary biliary cholangitis (PBC). The monies will be used for clinical trials, the company’s working capital, and “general corporate purposes.”
The announcement comes less than a week after CymaBay reported highly encouraging results from a phase 3 clinical trial of seladelpar. In the trial, the drug met all its primary and secondary endpoints.
If and when seladelpar is authorized or approved for use, it won’t be the only PBC treatment on the market. It already has two competitors, but what could possibly give it an edge is that it notably reduced itching; this is an issue for many people who suffer from the disorder.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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