Why do they need to do this?
ArQule Announces Proposed Public Offering
WOBURN, Mass.--(BUSINESS WIRE)--ArQule, Inc. (NASDAQ: ARQL) today announced its intention to offer, subject to market and other conditions, shares of its common stock in an underwritten public offering. The Company also expects to grant the underwriters a 30-day option to purchase up to an additional 15% of the shares of common stock offered in the public offering to cover over-allotments, if any.
Leerink Swann LLC and Lazard Capital Markets LLC are acting as joint book-running managers for the offering.
I hear you loud and clear. It's gotta be the first time I've ever owned a stock that has gone up after announcing dilution. I've seen it happen on one or two that I've not owned. It IS rare. And it really does make you look positively at the stock.
Strange to see a stock defying gravity on the second trading day after announcing a new offering. Usually the brokers who run the stock will heavily short it to reap the spread between the offering price and their discounted cost. This does not appear to be the case here. Maybe some positive news is waiting, or the offer is already completely subscribed or even over subscribed
Man, I sure hope you're right. In my experience a public offering on a biotech usually causes a major retrace: anywhere from 20% to 35% depending on sector and company conditions.
Needless to day, it is heartening to see the continued support (at least on opening). I usually wait for some indication of weakness (i.e. a significant dip) to try to buy smart. But I'd watched ARQL for so long I'd seen it increase steadily from about last August. I finally decided I'd watched it go up long enough (I've also been agonizingly watching PPO for about the same time) and jumped in on Wednesday (not Tuesday as I initially said). Paid $6.95 per share.
I just sold 1/3 of my holdings. I was just about to really pull the trigger and close the position, but it is still showing strength, so I'll hold on to the reduced amount. I like what I see about the company and its long-term prospects. But like any normal investor, you hate to jump in at a local high: particularly when two days later they announce dilutive financing.
The highest you could possibly have paid on Tues was 6.85. So you are down a nickel. No big deal. If you are that sensitive to price movement you shouldnt be investing. Look at the price action yesterday. 10x av vol and it impressively recovered. Maybe its not the end of the world, and bigger pockets than you or I saw this as a buying opportunity...
ARQL is one of the few small bios that is flush with money, at least enough to carry it another 2 years. They just received another $25 milestone payment. Maybe there's a new promising candidate drug in the wings that needs funding - just my speculation.
Odd that there's no mention of how big this offering will be.
Read on. This was not news, simply a misunderstanding by a few small after hour players.
"The securities described above are being offered by ArQule pursuant to a registration statement previously filed and declared effective by the Securities and Exchange Commission. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities in this offering."
This is news. While I don't currently own ARQL given its current valuation...this could present an opportunity, though this "play" has a few new warts on it.
We will soon see the pricing for this offer. The prospectus provided in today's filing does offer up some news updates on various clinical trials.
The sarcoma trial produced dissapointing results as they are not pursuing it. Same goes for Germ Cell trial (i.e. no meaningful responses). They are not pursuing that one either.
The HCC Phase II trial should produce top line results mid 2011. Its monotherapy so i am a bit iffy as to a positive result. They have had to reduce the dose in this trial due to toxicity. ARQL is looking at the prospect of a combo trial in the HCC indication and a Phase I is in progress.
Several other trials in other indications still enrolling. Always the possibility of another AKIP technology deal. ARQL does seem to have some solid preclinical/early clinic compounds in hte works.