Axsome Therapeutics (NASDAQ:AXSM) stock is heading lower on Wednesday as investors react to the company pricing a public share offering.
Axsome Therapeutics is selling 3 million shares of AXSM stock at a price of $75 each. This helps explain why the stock is down today, as its prior closing price was sitting at $83.37 per share. Investors are likely unhappy with the offering devaluing the stock.
To go along with this, the company has a 30-day option for underwriters to acquire another 450,000 shares at the offering price. SVB Securities is the lead book-running manager for the offering. Guggenheim Securities, Truist Securities, William Blair, and Cantor are joint bookrunning managers. Finally, Ladenburg Thalmann, Mizuho and H.C. Wainwright & Co. are lead managers for the offering.
Another reason the offering is hitting AXSM stock today is that it increases the total number of outstanding shares. With that increase, current shareholders in the company see their stakes diluted. Investors don’t typically react well to offerings for this reason.
What’s Behind the AXSM Stock Offering
With this offering, the company expects gross proceeds of $225 million. Axsome Therapeutics says that it will use this money for a variety of reasons. Among them are funding for new clinical programs, products and product candidates, as well as expanding commercial efforts and other general purposes.
AXSM stock is down 10% as of Wednesday morning, with some 1.3 million shares traded. For the record, its daily average trading volume is about 793,000 shares.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
